1. Use the security returns below, to answer the following questions. Assume that each\ return...
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1. Use the security returns below, to answer the following questions. Assume that each\ return is equally likely to occur.\ Security A Returns (%) Security B Returns (%)\ 17 9\ 11.3 8\ 10 7\ 7.8 6\ 6.2 5\ 4.7 -2.5\ a. What is the correlation between these securities?\ b. Assuming that an investor can only choose between two securities, A or B,\ generate a model that will calculate the expected returns and the portfolio\ standard deviations for each of the following weights in security A: 0%, 10%,\ 25%, 50%, 75%, 90%, 100%.\ c. Plot the expected the returns and standard deviations for the portfolios above and\ tell which ones are efficient (you can write on your graph (a scatterplot is fine)).\ d. Find the expected return and portfolio standard deviation for the minimum\ variance portfolio.
1. Use the security returns below, to answer the following questions. Assume that each\ return is equally likely to occur.\ Security A Returns (%) Security B Returns (%)\ 17 9\ 11.3 8\ 10 7\ 7.8 6\ 6.2 5\ 4.7 -2.5\ a. What is the correlation between these securities?\ b. Assuming that an investor can only choose between two securities, A or B,\ generate a model that will calculate the expected returns and the portfolio\ standard deviations for each of the following weights in security A: 0%, 10%,\ 25%, 50%, 75%, 90%, 100%.\ c. Plot the expected the returns and standard deviations for the portfolios above and\ tell which ones are efficient (you can write on your graph (a scatterplot is fine)).\ d. Find the expected return and portfolio standard deviation for the minimum\ variance portfolio.
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