Question

Target (T)	Macys (M)	Best Buy (B)
6	3	11
7	8	5
3	5	8
4	8	4

part A) Portfolio 1 is made up of 80% T and 20% M. Portfolio 2 is made up of 30% M and 70% B. What is the sample mean return on portfolio 1. What is the sample mean return on portfolio 2?

part B) What is the variance of portfolio 1?

Part C) What is the variance of portfolio 2?

Part D) Which portfolio is the wisest investment?

Part E)

What is the correlation coefficient of T and M?  What is the correlation coefficient of M and B? Which pair of variables tend to move together? How can you tell? Which pair of variables tend to move in opposite directions? How can you tell?

		A .7834, .5739, both T and M as well as M and B tend to move together, since both correlation coefficients are positive
		B - .2531, .7361 T and M tend to move in opposite directions (negative correlation coefficient), while M and B tend to move together (positive correlation coefficient)
		C .0745 and -.9897.  T and M tend to move together (positive correlation coefficient) while M and B tend to move in opposite directions (negative correlation coefficient ).
		D None of these

Answer 1