The following table contains the probability distribution for the returns of three securities over the next year.



a) Determine the expected return and standard deviation of each security.

b) Calculate a variance and covariance matrix for these four securities using the given probabilities.

c) Calculate a set of five portfolios that make up the capital market line using the Solver.

d) Create a chart of the CML including the original securities.

e) Repeat part (c) using a T-bill of 9% and include your results in the chart of part (d).

f) Repeat part (c) using the original T-bill rate but the using the following probability for each scenario:



And include your results in the chart of part (d).




Business

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