Combining the Riskless Asset and a single Risky Asset We know something special about the portfolio,namely that security 2 is riskless,so o2 0, and op becomes: Gp=W1G1)2+2W1*G1W20+W2* 02,112 Op=W1+1 Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall 18Combining the Riskless Asset and a Single Risky Asset We know something special about the portfolio, namely that security 2 is riskless, so s2 = 0, and sp becomes: sp = ((W1*s1)2 + 2W1*s1* W2*0+ (W2* 0)2)1/2 sp = W1 *s1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 18