Suppose you have some money to invest-for simplicity $1 and are planning to put a fraction w into a stock market mutual fund and the rest,1-w, into a bond mutual fund. Suppose that a $1 invested in a stock fund yields Rs after one year and a $1 invested in a bond fund yields Rb. Rs and Rb are random variables with expected value of 8% and 7% respectively, and standard deviation of 7% and 4% respectively. The correlation between Rs and Rb is 0.25. If you place a fraction w of your money in the stock fund and the rest 1-w in the bond fund then the return on your investment will be R=wRs+(1-w)Rb

Hey! We 've verified this expert answer for you, click below to unlock the details :)

I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!

Can someone please get me started on this problem, haven't taken anything like this in a while ._.

Looking for something else?

Not the answer you are looking for? Search for more explanations.