A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.8%. The probability distributions of the risky funds are: |
Expected Return | Standard Deviation | |
Stock fund (S) | 18% | 38% |
Bond fund (B) | 9% | 32% |
The correlation between the fund returns is .1313. |
What is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Expected return | 12.62 ± 1% % |
Standard deviation | 26.01 ± 1% % |
So 12.62 and 26.01 are the answers for expected return and standard deviation but I am having difficulty understanding how to get those answers
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