Suppose stocks a b and c have the same expected return and


Suppose stocks A, B and C have the same expected return and standard deviation. The correlations of returns are given as follows Corr(A, B) = 0.7, Corr(B, C) = −0.3 and Corr(A, C) = 0.2. Find the weights on each of these stocks (they need to add up to one), so that the portfolio constructed with these weights generates the portfolio with the lowest risk possible (portfolio risk for the portfolio constructed with these weights is smaller than portfolio risk of a portfolio using any other weights)

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Business Economics: Suppose stocks a b and c have the same expected return and
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