You are interested in forming a portfolio with Stock S and Bond B. Stock S has an expected return of 16.8% and a standard deviation of returns of 25.2%. Bond B has an expected return of 7.2% and a standard deviation of returns of 11.9%. The correlation coefficient of the returns of S and B is 0.35. The risk-free rate of return is 2.5%. Using increments of two percentage points, fill in the template posted and plot both efficient frontiers (with vs. without the risk-free asset.) When plotting the line for the frontier with the risk-free asset, use a range from 0 to 30 for the X values. Please put the Wb and Ws for the maximum-Sharpe-ratio portfolio in the last row of your data.

E(Rs)	E(Rb)	SDstock	SDbond	CorrBS	T-bill rate		wb for min. var. portfolio:		numerator =					wb for optimal Sharpe Ratio:				Term 1	Term 2
16.8	7.2	25.2	11.9	0.35	2.5				denominator =								numerator:
									Answer =								denominator:
																	Answer:
								Now construct EF when risk-free asset exists.	Line goes through two points: (0,rf) and xy coordinates of optimal risky portfolio (i.e., highest Sharpe ratio).	We know that (0,rf) = (0, T-bill rate). Now we need to find portfolio with highest Sharpe ratio.		This is our slope.	Find points on line.
ws	wb	E(rp)	(wssds)^2	(wbsdb)^2	2wssdswbsdbpbs	Var(rp)	SD(rp)				Sharpe Ratio	Max Sharpe Ratio	x	y=mx+b
1	0	0.00%										THIS CELL ONLY.	0
0.00%	2.00%	0.00%										USE =MAX FUNCTION.	1
	2.00%	0.00%											2
	2.00%	0.00%											3
	2.00%	0.00%											4
	2.00%	0.00%											5
	2.00%	0.00%											6
		0.00%											7
		0.00%											8
													9
													10