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There are three assets you can invest in. They are: A riskless bond with a return of 3.1% A risky bond with an expected return
There are three assets you can invest in. They are:
- A riskless bond with a return of 3.1%
- A risky bond with an expected return of 7.5% and a return variance of 14.9%
- A risky stock with an expected return of 14.5% and a return variance of 32.4%. The covariance between the returns on this stock and the risky bond is 0.5.
What is the expected return on the best risky portfolio you can build using these assets? Please enter your answer as a decimal to at least 4 places - if your answer is 10.5%, please enter 0.1050.
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