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Suppose you consider investing in Cartman, Inc. and Garrison Enterprises. The correlation between the two stocks is 0.5 and the risk-free rate is 2%. Cartman's

Suppose you consider investing in Cartman, Inc. and Garrison Enterprises. The correlation between the two stocks is 0.5 and the risk-free rate is 2%. Cartman's expected return is 12% and its standard deviation is 20%. Garrison's expected return is 17% and its standard deviation is 30%.

a.What are the variances of the two stocks and what is the covariance?

b.How much weight you should invest in each of these two stocks so that your portfolio is a minimum variance portfolio?

c.How much weight you should invest in each of these two stocks so that your portfolio is a tangency portfolio?

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