Question

Use the information below to help answer questions 1-7 • Excel's solver was used to create the Minimum Variance Frontier (MVF) • Portfolios 1-6 are all on the MVF • Portfolios 1-6 were created by weighting Stock W, Stock X, Stock Y, Stock Z • Portfolios 1-5 are corner portfolios •The risk free rate is 4% • All return and risk figures are annualized 16949 9.99 22222 1. Assume a two risk asset portfolio with 50% Stock W and 50% Stock Z has a total risk of 29%. This implies the correlation between Stock Wand Stock Z is closest to: a)-1.0 b) -0.5 c) 0.0 d) 0.5 e) 1.0 2. Assume the covariance between Stock Wand Stock Z is 0.0170. A two risk asset portfolio constructed with 40% Stock Wand 60% Stock Z has a total risk closest to Round your answer to the nearest 0.1%. a) 19.3% b) 21.4% c) 24.1% d) 26.7% e) None of the above

questions are not in excel

Answer 1

Ans

1(B)

2(B)

3(A)

4(C)

5(B)

6(D)

7(D)

working attached with paper please see attached file.