(Hint: you may want to use excel for this question):

(Hint: you may want to use excel for this question): Suppose that there are only two stocks in the market and a risk free asset

E(Ra)=18% , SD(Ra)=15%

E(Rb)=12% , SD(Rb)=7%)

COV(Ra,Rb)=0 Rf=5%,

Supposed that you want to invest in a portfolio with E(Rp)=15%.

a.    Calculate the SD(Rp)

b. Write down the portfolio’s weights for each one of the securities you decided to invest in.

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