Accra Hearts of Oak FC Ltd wants to invest in two projects, namely, A & B. The expected return on projects A & B are 20% and 50% respectively while the risk associated with project A is 13% and that of B is 71%. Accra Hearts of Oak FC Ltd planned to invest 70% of its available funds in project A and the remaining in project B. The correlation coefficient between the returns of the projects is -0.10.
- Estimate the returns from the proposed portfolio of projects A & B
- Calculate the risk of the portfolio
- Suppose the correlation coefficient between A & B was -1.0. How should Accra Hearts of Oak Ltd invest its funds to achieve a zero-risk portfolio?