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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

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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 R8 is random with mean 0.07 (7%) and standard deviation 0.06, and suppose that Rb is random with mean 0.04 (4%) and standard deviation 0.03. The correlation between Rs and Rb is 0.21. If you place a fraction wof your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R: sz + (1 w)Rb. Suppose that w = 0.42. Compute the mean and standard deviation of R. The mean is .053 . (Round your response to three decimal places.) The standard deviation is .033 . (Round your response to three decimal places.) Suppose that w = 0.63. Compute the mean and standard deviation of R. The mean is .059 . (Round your response to three decimal places.) The standard deviation is .042 . (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = 1.00 maximizes )4. (Round your response to two decimal places.) What is the standard deviation of R for this value of W? o- = .06 for this value of w. (Round your response to two decimal places.) What is the value of wthat minimizes the standard deviation of R? w = .14 minimizes the standard deviation of R. (Round your response to two decimal places.)

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