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Andrea is considering forming a portfolio consisting of Kalama Corp and Adelphia technologies. The two corporations have a correlation of -0.1789, and their expected return and standard devistions are as follows: Kalma Crop expected return 14.86% standard deviation 23.36%, Adelphia technologies expected return 23.11% and standard deviation 31.89%.

Questions:
1. Calculate the frontier for all possible investement combinations of Kalam Crop. and Adelphia Technologies (from 0% to 100%, in 1% increments). Determine the optimial risky portfolio if the risk-free rate is 3%.

2. Andrea has $50,000 and wants to earn a 19% expected return on her investment. What is the optimal manner in which to structure her portfolio -- both in dollar amounts and in weights relative to her $50,00 --based on the preceeding information?

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Category:- Basic Finance
Reference No.:- M9863359

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