Suppose you have some money to investfor simplicity, $1and you are planning to put a fraction w into a stock market mutual fund and therest, 1w, 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 0.08 (8%) and standard deviation 0.07, and suppose that Rb is random with mean 0.05 (5%) and standard deviation 0.04. The correlation between Rs and Rb is 0.26. If you place a fraction w of your money in the stock fund and therest, 1w, in the bondfund, then the return on your investment is R=wRs+(1w)Rb.

Suppose that w= 0.53. Compute the mean and standard deviation of R.

Find

A. The mean is

B. Standard Deviation

Suppose that w= 0.79. Compute the mean and standard deviation of R.

A. The mean is

(Round your response to three decimal places.)

B. The standard deviation is

What value of w makes the mean of R as large aspossible?

w= maximizes . (Round your response to two decimal places.)

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

= for this value of w. (Round your response to two decimal places.)

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.)