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  3. 4. suppose that you are managing the only investme

4. Suppose that you are managing the only investment firm in a country with only...

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4. Suppose that you are managing the only investment firm in a country with only two companies: National Auto Co. (NAC) and National Oil Inc. (NOI). From historical data, you make the following estimates for the moments of the stocks annualized return: NAC = 7%, NOI /NAC,NOI = 0.1. Also, assume that all the investors in the country are Mean-Variance investors. -20%, NAC 5%, NOI 10%, = (a) (5 points) A client asked you for a portfolio that offers two times the return of the minimum variance portfolio. Find the portfolio weight of each stock in such a portfolio. (b) (5 points) The effective annual risk free rate is 4%. What portfolio of only the two stocks should you be offering to your clients? Explain your

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