Exercise

Adding T-bills to your portfolios

As seen in the lectures, you can potentially increase the performance of your portfolio significantly by investing in T-bills as well.

Use an annual risk-free rate of 3% per year for the T-billand and create a set of portfolios with the T-bills and the Boeing stock as underlying assets. Again, you are allowed to take short positions in both assets.

Instructions

100 XP

Assign to t_bill_rate the annual risk-free rate of 3%.
Calculate the expected portfolio return and portfolio variance for this set of portfolios.
Add these new portfolio combinations to the plot that you constructed in the previous exercise with the help of points. For the color code argument use col = "blue", for the type use type = "b".

Take Hint (-30 XP)