Calculate expected return of given portfolio

Reference no: EM131477183

Question: On the occasion of your birthday, your wealthy Aunt Hilda sends you a check for $5,000, under the express condition that you invest the money in either (or all) of the following: Government Bonds, Hilda's Hybrids Inc., and/or Hilda's Hubby Inc. The relevant statistics on each of these investments are provided below

a. Show the Capital Market Line, i.e. all the combinations of investment in the risk-free asset and the two companies. Provide results in both chart and graph form. Note that it will be helpful to first calculate the market portfolio M.

b. Supposing you decided to invest in the following proportions, 40% government bonds, 60% in the M portfolio. Calculate the expected return and variance of returns for this portfolio.

Reference no: EM131477183

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