Let G be the global minimum variance portfolio. The weights of A and B in G are __________ and __________, respectively.

Consider the following probability distribution for stocks A and B:







A. 0.40; 0.60

B. 0.66; 0.34

C. 0.34; 0.66

D. 0.77; 0.23

E. 0.23; 0.77


E. 0.23; 0.77

wA = [(1.1)2 – (1.5)(1.1)(0.46)]/[(1.5)2 + (1.1)2 – (2)(1.5)(1.1)(0.46) = 0.23; wB = 1 – 0.23 = 0.77.

Business

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