Taking X=6

An investor has the following assets available for investment. Stock A B return 0.10 0.16 St. dev 0.18 0.36 Cov (A,B) -0.029 a. How can an investor earn a target rate of return of 12. x percent using the two stocks above? b. What will be the risk of his portfolio? C. What is the maximum return the investor can make if his maximum risk tolerance is 17.5 + x percent? Find the weight of each stock in the portfolio and the maximum attainable return. d. Suppose that covariance between the two stocks changes to Cov(A,B) = -0.01x, find the minimum variance portfolio and the return of this portfolio