Chapter 5, Problem 17PS

Suppose that in Problem 5.16 you wanted to create a portfolio that consists of the corporate bond fund and the common stock fund. Compute the portfolio expected return and portfolio risk for each 01' the following situations:

a. $\text{\$311}$ in the corporate bond fund and $\text{\$700}$ in the common stock fund.

b. $\text{\$5001}$ each fund.

c. $\text{\$711}$ in the corporate bond fund and $\text{\$300}$ in the common stock fund.

d. On the basis of the results of (a) through (c), which portfolio would you recommend? Explain.