1. Portfolios that lie on the portion of the efficient frontier below the minimum-variance portfolio ___________________.
A. add nothing to the investment opportunity set
B. are sometimes useful in implementing sophisticated hedging techniques
C. represent opportunities for arbitrage
D. None of the above answers is correct
2. You are considering investing $1,000 in a complete portfolio. The complete portfolio is comprised of treasury bills that pay 5% and a risky portfolio, P, constructed with 2 risky securities X and Y. The weight of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 10%. The dollar values of your positions in X, Y, and treasury bills respectively would be __________, __________ and __________ if you decide to hold a complete portfolio that has an expected return of 8%.
A. $162, $595, $243
B. $243, $162, $595
C. $595, $162, $243
D. $595, $243, $162