Discussion Post: Finance Investment- Efficient Diversification
You found the expected returns and variance-covariance matrix of returns for 3 stocks:
Amazon Walmart Exxon
E(r) 36.9% 16.8% 4.5%
Amazon Walmart Exxon
Amazon 0.36
Walmart 0.06 0.16
Exxon 0.1 0.07 0.09
Attempt 1/10 for 9.5 pts.
Task
• Find portfolio weights, portfolio standard deviation when E(rp)=20% on the Efficient Frontier.
• Find portfolio weights, portfolio standard deviation and portfolio expected return for the minimum variance portfolio.
• Find portfolio weights, portfolio standard deviation and portfolio expected return for the optimal risky portfolio. Assume risk-free rate is 0.5%.
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.