Exhibit 7A -Refer to Exhibit 7A

question 2

Multiple Choice

Exhibit 7A.1
$$\mathrm { W } _ { 1 } = \left[ \mathrm { E } \left( \sigma _ { 2 } \right) ^ { 2 } - r _ { 1.2 } \mathrm { E } \left( \sigma _ { 1 } \right) \mathrm { E } \left( \sigma _ { 2 } \right) \right] \div \left[ \mathrm { E } \left( \sigma _ { 1 } \right) ^ { 2 } + \mathrm { E } \left( \sigma _ { 2 } \right) ^ { 2 } - 2 r _ { 1.2 } \mathrm { E } \left( \sigma _ { 1 } \right) \mathrm { E } \left( \sigma _ { 2 } \right) \right]$$
-Refer to Exhibit 7A.1.What weight of security 1 gives the minimum portfolio variance when r_1.2 = .60,E(?₁) = .10 and E(?₂) = .16?

• A) .0244
• B) .3679
• C) .5697
• D) .6309
• E) .9756

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