A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the thirdis a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows:Stock fund (S)Bond fund (B)ExpectedReturn21%13The correlation between the fund returns is 0.13.Req A1Required:a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds?a-2. What are the expected value and standard deviation of the minimum-variance portfolio rate of return?StandardDeviation36%22Complete this question by entering your answers in the tabs below.Req A2What are the investment proportions in the minimum-variance portfolio of the two risky funds?Note: Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.Portfolio invested in the stockPortfolio invested in the bond A pension fund manager is considering three mutual funds. The first is a stock fund, the second a long-term bond fund, and the thirdis a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows:Stock fund (S)Bond fund (B)ExpectedReturn21%13The correlation between the fund returns is 0.13.Req A1StandardDeviationRequired:a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds?a-2. What are the expected value and standard deviation of the minimum-variance portfolio rate of return?36%22Complete this question by entering your answers in the tabs below.Expected returnStandard deviationReq A2What are the expected value and standard deviation of the minimum-variance portfolio rate of return?Note: Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.

Risk and return are essential financial principles. The term “risk” refers to the uncertainty and…

Required: a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds? a-2. What are the expected value and standard deviation of the minimum-variance portfolio rate of return?

Required: a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds? a-2. What are the expected value and standard deviation of the minimum-variance portfolio rate of return?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 5FPE

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