Youestimatetheexpectedarithmeticmean,standarddeviation,andcorrelationmixof your stock bond portfolio as follows: ArithmeticMean Standard Deviation Correlations Stocks
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Question:
- You estimate the expected arithmetic mean, standard deviation, and correlation mix of your stock bond portfolio as follows:
Arithmetic Mean | Standard Deviation | Correlations
Stocks Bonds | ||
Stocks | 10% | 20% | 1.0 | 0.4 |
Bonds | 5% | 10% | 0.4 | 1.0 |
If you held a portfolio 60% in stocks and 40% in bonds, what is your portfolio expected return next year? What is the standard deviation of returns?
Related Book For
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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