Security A offers an expected return of 15 percent with a standard deviation of 7 percent Security B offers an expected return of 9 percent with a standard deviation of 4 percent The correlation between the returns of A and B is 0 6 If an investor puts one fourth of his wealth in A and three fourth...

Security A offers an expected return of 15 percent with a standard deviation of 7 percent. Security

Question:

Security A offers an of 15 percent with a standard deviation of 7 percent. Security B offers an of 9 percent with a standard deviation of 4 percent. The correlation between the returns of A and B is +0.6. If an investor puts one-fourth of his wealth in A and three-fourths in B, what is the and risk (standard deviation) of this portfolio?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...