Invested in only one stock-microsoft

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Your investment portfolio consists of ?$20,000 invested in only one stock-Microsoft. Suppose the? risk-free rate is 5 %, Microsoft stock has an expected return of 10 % and a volatility of 40 %, and the market portfolio has an expected return of 8 % and a volatility of 17 %.Under the CAPM? assumptions,

a. What alternative investment has the lowest possible volatility while having the same expected return as? Microsoft? What is the volatility of this? investment?

b. What investment has the highest possible expected return while having the same volatility as? Microsoft? What is the expected return of this? investment?

Hint?: Make sure to round all intermediate calculations to at least five decimal places.?

Reference no: EM131595173

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