Assume you currently own $10000 of IBM stock and have an additional $15000 you wish to invest. You have narrowed the alternatives to two: (i) an investment
in Treasury Bills or (ii) an investment in Homestake Gold Mining. (The entire $15000 will be invested in one of the two alternatives.)
(a) Given the following information determine the expected returns and standard deviations of the two alternative portfolios.
Homestake Gold Mining
The correlation coefficient between IBM and Homestake Gold Mining is ?0.3.