You wish to invest in two hedge funds: Macro and Micro. The data on returns of two funds are shown in the table below:

	Macro	Micro
Expected return	15%	10%
Standard deviation	16%	11%
Beta	1.5	0.8
Correlation coefficient	0.5

1. Construct the minimum variance efficient portfolio of these two funds and find its standard deviation and expected return.
2. What percentage of your wealth should you invest in each of these two funds to earn 20% expected return on your portfolio?
3. What do these weights mean?
4. What is the standard deviation of the portfolio in part (b) above?
5. What is the beta of your portfolio in (a)?
6. What is the beta of your portfolio in (b)?