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  3. assume that you can invest $1,000 in a savings acc

Assume that you can invest $1,000 in a savings account, in a low-risk fund, and...

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Accounting

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Assume that you can invest $1,000 in a savings account, in a low-risk fund, and a high-risk fund. If you invest in the savings account, you get 1% interest per year. We denote by X the return of the low-risk fund, and by Y the return of the high-risk fund. We assume that E(X) 5%, Var(X) = 10%, E(Y) 10%, E(Y) = 9%, Var(Y) = 9%, Var(Y) = 40%, , and Cov(X, Y) = 0. If you want to achieve an expected return of 5% at minimal risk (standard deviation of return), how do you invest the $1,000? = = =

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