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  3. 3. the minimum variance portfolio comprises 45% in

3. The minimum variance portfolio comprises 45% in an equity portfolio and the remainder in...

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3. The minimum variance portfolio comprises 45% in an equity portfolio and the remainder in a debt portfolio. The equity portfolio has an expected return of 11% and a standard deviation of 28%. The equity and debt portfolio returns have a covariance of 126. If the debt portfolio has an expected return of 5.5%, what is the standard deviation of the debt portfolio? (3 marks) 4. Lihle is considering buying shares in Mr Price. Explain to Lihle the risks that he will face when buying shares, giving relevant examples thereof, and how he can reduce the risk that he faces. Assume that Lihle owns no other shares and is only able to invest in South African shares. (4 marks)

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