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You are asked to provide your uncle with advice on an investment opportunity. He currently holds $50,000 in Anheuser Busch InBev NV (a Brazilian-Belgian drink

You are asked to provide your uncle with advice on an investment opportunity. He currently holds $50,000 in Anheuser Busch InBev NV (a Brazilian-Belgian drink and brewing company stock) and wants to invest $50,000 in another stock. He wants to keep the Anheuser Busch InBev NV stock for at least an additional year. Please evaluate the opportunity to invest in one of the shares shown below.

Anheuser Busch InBev NV

Nestle

Coca-Cola Co

Anheuser Busch InBev NV

1

0.34

0.37

Nestle

1

0.03

Coca-Cola Co

1

Standard deviation (%)

28.4

9.06

29.3

a) Calculate the portfolio variance for two different portfolios.

b) What is the safest attainable portfolio under these restrictions?

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