 # Portfolio Selection and Asset Allocation

Can someone help in this Question too
Consider two risky assets with prices S1(0) = 100, S2(0) = 150
the price is:
S1(1), S2(1) =



(80, 250) with probability 2/8
(90, 150) with probability 4/8
(120, 200) with probability 2/8
(a) Compute mean and standard deviations (µ1, σ1) and (µ2, σ2) for the two
assets
(b) Compute the correlation coecient between the two assets
© Assuming :w1 ≥ −0.5 and w2 ≥ −0.5. On the (σ, µ)-plane, plot all the
portfolios attainable by investing in the risky assets. Highlight the two risky
assets on the plot.
(d) Assume we allow for borrowing and investment with the risk free rate
r = 3%. Compute the Sharp ratio with some arbitrary weights satisfying the
conditions set on the weights in ©.
(e) Following the assumptions in (d), maximise the Sharp ratio and on the
(σ, µ)-plane plot the ecient portfolios.
(f) Derive the Capial Market Line (CML) and plot this on the ecient (σ, µ)-
plane of part (d).

I am also confused in this question. Need help also.