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Michael and Janine are both investors wanting to purchase investment portfolios. The expected return, standard...

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Michael and Janine are both investors wanting to purchase investment portfolios. The expected return, standard deviation and beta of various investments are shown in the following table: Investment Beta Average Standard return over last year (% pa) Deviation (% pa) re 17 14 2.2 0.8 Apocryphal Industries Bona Fide Ltd Market Index 10 year Bond 10 11 0 Michael wants a portfolio that has an expected return of 9% pa and that contains only Apocryphal Industries and 10 year bonds. Janine wants a portfolio with a 71% weighting in Apocryphal Industries and a 29% weighting in Bona Fide Ltd shares. The correlation coefficient between the returns of the shares in Apocryphal Industries and Bona Fide Ltd is 0.5. a) Calculate the percentage of each share that Michael should include in his portfolio to achieve his desired results. Give your answers as a percentage to the nearest percent. Investment Apocryphal Industries Bona Fide Ltd 10 year Bond Percentage to invest % pa % pa % pa b) Janine is interested in finding out how risky her portfolio is. Calculate the standard deviation of Janine's portfolio. Give your answer as a percentage to 2 decimal places. Standard deviation = % pa

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