We consider different risky portfolios consisting of two risky assets X and Y. Suppose the expected return and standard deviation of the Minimum Variance Portfolio (MVP), M, are 9.05% and 1.04%. There are four other risky portfolios consisting of X and Y: A) Portfolio A: E(rA) = 8.25% and σA = 1.10%. B) Portfolio B: E(rB) = 9.20% and σB = 1.05%. C) Portfolio C: E(rC) = 8.70% and σC = 1.05%. D) Portfolio D: E(rD) = 8.53% and σD = 1.06%.
(1) Please plot and label the four risky portfolios and the MVP in a coordinate plane with y-axis being E(r) and x-axis being σ.
(2) Which of the portfolio(s) is(are) on the efficient frontier? Why?
We consider different risky portfolios consisting of two risky assets X and Y. Suppose the expected...