Treasury bills are paying a 3% rate of return. A risk-averse investor with a risk aversion of A =3.5 will choose to invest 55% in the optimal risky portfolio with a standard deviation of 24% only if the optimal risky portfolio's expected return is at least _____ %. ( Round your answer to two decimal places)

The following stock fund and bond fund have a correlation coefficient= 0.05 and the risk-free rate is 4%.

Asset	Expected return	Standard deviation
Stock fund	12%	30%
Bond fund	8%	25%

What is the expected return on the optimal risky portfolio created by the two funds ?

______ % (rounded to two decimal places )

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, r. The characteristics of two of the stocks are as follows:

Stock	Expected Return			Standard Deviation
A		7	%		30	%
B		14	%		70	%
Correlation = 1

a. What is the expected rate of return on the minimum-variance portfolio comprised of the two stocks? (Round your answer to 2 decimal places.)

b. What is the estimated standard deviation of the minimum variance portfolio?

multiple choice

• 0

• between 30 % and 70%

• 30 %

• 70 %