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  3. over the past three years: - the annual rate of re

Over the past three years: - The annual rate of return on the market portfolio...

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Accounting

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Over the past three years: - The annual rate of return on the market portfolio has been 14.0%,20.0%, and 5.0%. - The annual risk-free rate of return has been 2.0%,2.0%, and 2.0%. - The annual rate of return on stock X has been 12.0%,15.0%, and 3.0%. - The annual rate of return on stock Y has been 2.0%,1.0%, and 5.0%, implying an expected return of 2.0% and a biased standard deviation of 2.45%. (a) What is the expected return and biased standard deviation of return for X ? (b) What is the expected return and standard deviation of a portfolio that invests $400,000 in X and $600,000 in Y ? (c) Based on the mean-standard deviation rule, would you prefer to invest $1,000,000 in Y or to invest $400,000 in X and $600,000 in Y ? Briefly explain your

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