You are a fund manager who is considering three mutual funds: a fund of equities

You are a fund manager who is considering three mutual funds: a fund of equities
E; a fund of long term corporate debt D; and a fund of safe short-term government
debt F which yields a rate of return of 5%.The probability distributions for the two risky funds are given in the table.Expected Return E[r] Standard Deviation, σEquity Fund (E) 14% 26%.Debt Fund (D) 9% 14%.The correlation between the risky funds is Your investment analyst has determined that the optimal risky portfolio of the
two risky funds has the expected rate of return of 11.1% and standard deviation
of 14.8%. Determine the minimum-variance portfolio of the two risky funds as given by
the weights of your investment into funds D and E respectively.Determine the expected rate of return and the standard deviation of the minimum-variance portfolio. Show all relevant calculations. [7 Marks] Present graphically in the E[r]-σ plane the portfolio opportunity set as given by the two risky funds E and D. Indicate all relevant reference points.Without doing any calculations, demonstrate graphically in the same E[r]- σ
plane how the portfolio opportunity set would change (relative to its current position) if the correlation between the risky funds D and E takes value: Provide an explanation in no more than 150 words.
Your client Jin Li wishes to obtain 17% return on her investment portfolio.
How would you advise your client to allocate her capital among the available
portfolios E, D and F? What will be the standard deviation of your client’s
portfolio? Present all relevant calculations.Your clients Peter and Jane have coefficients of risk aversion: Indicate briefly how would you charact erise each of these investors’
attitude to risk: (i) risk-loving, (ii) risk-neutr al or (iii) risk-averse? Without any calculations, indicate which of the indifference curves depicted below: C1 or C2 is likely to belong to Ja ne? Explain your answer carefully in no more than 200 words.