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You have a choice of investing $1000 in the following two risky mutual funds. Bond fund (1) Stock fund (2) Expected Return 10% 20% Std.

You have a choice of investing $1000 in the following two risky mutual funds.

Bond fund (1) Stock fund (2)

Expected Return 10% 20%

Std. Deviation 10% 20%

Correlation (stock fund, bond fund) = 0

If you choose to invest in the minimum-risk portfolio composed from the two risky funds, how much is invested in the Bond Fund? Stock Fund? What is the expected return and standard deviation of the minimum risk portfolio?

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