Suppose you have some money to investfor simplicity, $1and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 w, into a bond mutual fund. Suppose that $1 invested in a stock fund yields Rs after 1 year and that $1 invested in a bond fund yields Rb, suppose that Rs is random with mean 0.1 (10%) and standard deviation 0.08, and suppose that Rb is random with mean 0.06 (6%) and standard deviation 0.05. The correlation between Rs and Rb is 0.3. If you place a fraction w of your money in the stock fund and the rest, 1 w, in the bond fund, then the return on your investment is R=wRs+(1w)Rb. Suppose that w = 0.6. Compute the mean and standard deviation of R.

e) What value of w makes the mean of R as large as possible?

w = __ maximizes .

(Round your response to two decimal places.)

f) What is the standard deviation of R for this value of w?

= __ for this value of w.

(Round your response to two decimal places.)

g) What is the value of w that minimizes the standard deviation of R?

w = __ minimizes the standard deviation of R.

(Round your response to two decimal places.)