Federal Reserve Board Regulation T (Reg. T)1allows an initial margin on stock pur-chases of 50% regardless of the volatility of the stock (i. e. 2:1 leverage). The margin of retail accounts is typically governed by Reg. T. By contrast, the margin of profes-sional trading accounts is generally governed by something like SPAN. You see thatthe hedge fund you recently joined maintains both a retail account and a professional trading account. If your hedge fund is trying to minimize the amount of capital in themargin accounts, in which account will the low-volatility assets be kept and why

Monthly price data for mdltx and ekwax from yahoo finance is contained in the excel spreadsheet for this exercise. there are 37 months of price data for the period from september 2009 to september 2012. (note: these prices already incorporate dividend payments.) the 36 monthly returns for each fund are also provided. calculate average (arithmetic) monthly return and standard deviation for each fund. you can use the excel functions average, stdev to derive these stats. annualize these statistics. use the correl function in excel to derive the correlation coefficient between the two sets of returns. (annual correlation is the same as monthly correlation. hence, no need to annualize this stat.) using the annualized statistics derived in step 1, compute the expected return and standard deviation for portfolios containing from 0% to 100% mdltx (and 100% to 0% ekwax) by 10% increments. graph the resulting portfolios. based on your analysis, is there any potential benefit to diversification across these two funds? explain. of the 11 portfolios you graphed, which are efficient?