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You are considering investing in three different assets. The first is a stock, the second is a long-term government bond and the third is
You are considering investing in three different assets. The first is a stock, the second is a long-term government bond and the third is a T-bill money market fund that yields a sure rate of 5%. The probability distributions of both the risky assets: Stock (S) Bond (B) Expected Return 15% 9 Standard Deviation 32% 23 The correlation between the stock and bond returns is 0.15. What are the allocations of your wealth to the Stock (S) and the Bond (B) when you form the ptimal Risky Portfolio (O)? 35% in the Stock and 65% in the Bond 31% in the Stock and 69% in the Bond 65% in the Stock and 35% in the Bond 69% in the Stock and 31% in the Bond
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