You are interested in forming a portfolio with Stock S and Bond B. Stock S has an expected return of 14% and a standard devi
This assignment is to be done in Excel.
You are interested in forming a portfolio with Stock S and Bond B. Stock S has an expected return of 14% and a standard deviation of returns of 30%. Bond B has an expected return of 8% and a standard deviation of returns of 15%. The correlation coefficient of the returns of S and B is 0.22. The risk-free rate of return is 5%.
Using increments of 1 percentage point, fill in the template posted and plot both efficient frontiers (with vs. without the risk-free asset.) When plotting the line for the frontier with the risk-free asset, use a range from 0 to 30 for the X values.
Please do not forget the important reminders below:
1. The weight in the bond (Wb) for the minimum-variance portfolio needs to be inserted numerically within the Wb column.
2. The weight in the bond (Wb) for the maximum-Sharpe-Ratio portfolio does not need to be inserted numerically in the Wb column, but you can do so if you would like.
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