Astrid has the following two investments in her portfolio: a. Which investment is riskier by itself and

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Astrid has the following two investments in her portfolio:

Investment Expected return Standard deviation Beta % Weighting 1.40 3.1% 3.9 55% 45 M 12% 0.85 19%

a. Which investment is riskier by itself and in a portfolio sense? 

b. What is the expected return of the portfolio?
c.
With a correlation coefficient of +0.30, what is the standard deviation of the portfolio?
d.
What is the beta of the portfolio?
e.
What is the significance of the results in parts a through a?

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

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