You are considering combining two risky portfolios: a bond portfolio (B) and a stock portfolio...
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You are considering combining two risky portfolios: a bond portfolio (B) and a stock portfolio (S). You want your combined risky portfolio to have the least amount of risk possible. The expected return of B is 5%, and its standard deviation is 13%. The expected return of Sis 12% and its standard deviation is 15%. The two portfolios have a correlation coefficient of 0.34. What weight would you place on portfolio S (stocks) to achieve the lowest possible risk? Answer in decimal form (e.g., for 50% put 0.5 not 50), and round to the nearest four decimal places. Be sure not to round any of your preliminary calculations
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