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2. Use the following information to answer the questions. Variance-Covariance matrix Stock H Stock 1...

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2. Use the following information to answer the questions. Variance-Covariance matrix Stock H Stock 1 Stock J Stock H 0.0169 Stock I Stock 1 0.0026 0.0026 0,040 0.0400 Stock 0.0156 0.0090 0.0225 You form two portfolios. You form Portfolio A by investing $2,000 in Stock H and $8,000 in Stock I while you form Portfolio B by investing $4,000 in Stock I and $6,000 in Stock respectively. 1) Given expected returns of 0.06,0.10, and 0.12 for Stocks H. I, and Figure out the expected return on Portfolios A and B. (20points) 2) Figure out the variance for Portfolios A and B. (30points) Normal No Spacing Heading SLOCK 0.0109 Stock I 0.0026 0.0400 Stock J 0.0156 0.0090 0.0225 You form two portfolios. You form Portfolio A by investing $2,000 in Stock H and $8,000 in Stock I while you form Portfolio B by investing $4,000 in Stock I and $6,000 in Stock 1) Given expected returns of 0.06,0.10, and 0.12 for Stocks H, I, and respectively, Figure out the expected return on Portfolios A and B. (20points) 2) Figure out the variance for Portfolios A and B. (30points) 3) Given the risk free rate of 0.04, figure out the Sharpe ratio for Portfolios A and B. Which portfolio is better based on the Sharpe ratio? (30points)

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