Consider the expected return and standard deviation of the following two assets:   Asset 1:  E[r1]=0.1  and  σ1=0.2    Asset 2: E[r2]=0.3  and  σ2=0.4     (a) Draw (e.g. with Excel) the set of achievable portfolios in mean-standard deviation space for the cases: (i) ρ12= -1, (ii) ρ12=0.   (b) Suppose ρ12=-1. Which portfolio has the minimal variance? What is the variance and expected return of that portfolio?     (c) Derive the formula for the variance of a portfolio with four assets.

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Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.