1. Suppose you construct a portfolio of one stock and one bond that have a correlation of -0.5. The stock has a standard deviation of 16 percent and the bond has a standard deviation of 12 percent. What is the weight on the bond that will produce the lowest standard deviation?
2. In your will, you bequeath $6000000 into an account that earns 12% annually. The account will fund an annual award in perpetuity that will be given to a world leader who has excellent intentions to promote peace. If you want the award amount to increase by 6% every year, what will be the first year's award amount be?