Question: There are two mutual fund: stock fund and band fund, which have the following
Problem 1 there are two mutual fund: stock fund and band fund, which have the following expected returns and standard deviations:
| Return | Std | |
| Stock | 12% | 33% |
| Bond | 5% | 26% |
The two funds have a correlation coefficient PBS of 0.0308. The T-bill rate is 4.2%. You want 11% return for your investment. What percentages of your wealth should be invested in T-bill, and the two mutual funds?
