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2.The ABC company wants to invest in two risky assets over the next 12 months. Analysts predict that the expected return on asset A is 5% per annum and on asset B it is 7% per annum. The standard deviation of the returns for asset A is 8% and for asset B it is 9%. The correlation between the two assets in 0.4 and the risk-free rate is 5.5% per annum. What combination of the two assets will give returns that exceed the risk-free rate?p)
3.What are the minimum variance weightings for a two-asset portfolio where both assets have the same variance?4.The correlation coefficients between pairs of stocks are as follows: Corr(A,B) = 0.85, Corr(A,C) = 0.60, Corr(A,D) = 0.45. Each stock has an expected return of 8% and a standard deviation of 20%. If your entire portfolio is now composed of stock A and you can add some of only one stock to your portfolio, would you choose: