Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with
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Question:
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 21.2 %21.2%.
| Upper E left bracket Upper R right bracket E [ R ] | SD left bracket Upper R right bracket SD [ R ] |
Johnson & Johnson | 7.3 %7.3% | 16.1 %16.1% |
Walgreen Company | 10.8 %10.8% | 19.8 %19.8% |
For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate:
a. The expected return.
b. The volatility (standard deviation).
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