Debt Equity

E(r) 8% 13% Wd We
SD 12% 20% 0 1
Cov(rd,re) 0.014 0.1 0.9
Corr 0.57 0.2 0.8
Cov(rd,re) -0.024 0.3 0.7
Corr -1 0.4 0.6
Cov(rd,re) 0 0.5 0.5
Corr 0 0.6 0.4
Cov(rd,re) 0.024 0.7 0.3
Corr 1 0.8 0.2
0.9 0.1
1 0
 Portfolio SD for given Correlations(ƿ)
E(rp) -1 0 0.57 1
13.00% 20.00% 20.00% 20.00% 20.00%
12.50% 16.80% 18.04% 18.71% 19.20%
12.00% 13.60% 16.18% 17.47% 18.40%
11.50% 10.40% 14.46% 16.31% 17.60%
11.00% 7.20% 12.92% 15.24% 16.80%
10.50% 4.00% 11.66% 14.28% 16.00%
10.00% 0.80% 10.76% 13.46% 15.20%
9.50% 2.40% 10.32% 12.79% 14.40%
9.00% 5.60% 10.40% 12.32% 13.60%
8.50% 8.80% 10.98% 12.05% 12.80%
8.00% 12.00% 12.00% 12.00% 12.00%
Corresponding Covariance
Minimum Variance Portfolio ƿ=-1 ƿ=0 ƿ=.57 ƿ=1
Wd 0.6250 0.7353 0.9705 2.5000 -0.024 0 0.014 0.024
We 0.3750 0.2647 0.0295 -1.5000
E(rp) 9.88% 9.32% 8.15% 0.50%
SDp 0.00% 1.06% 1.44% 0.00%