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2. For this question, use the following data table: Expected Return Standard Deviation AT&T 0.10 0.15...

2. For this question, use the following data table: Expected Return Standard Deviation AT&T 0.10 0.15 Microsoft 0.21 0.25 What is the minimum-risk (standard deviation) portfolio allocation of AT&T and Microsoft if the correlation between the two stocks is 0? 0.5? 1?-1? What is the standard deviation of each of these minimum-risk portfolios?

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Answer #1

Formulas Used:-

minimum variance portfolio=($E$5^2-(D8*$E$4*$E$5))/($E$4^2+$E$5^2-(2*D8*$E$4*$E$5))

Standard Deviation=(($E$4^2*D9^2)+($E$5^2*(1-D9)^2)+(2*D8*$E$4*$E$5*D9*(1-D9)))^(1/2)

i hope my efforts will be fruitful to you.......

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