Suppose Janet Smith holds 100 shares of Macrosoft stock and 300 shares of Intelligence stock. Macrosoft stock
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Suppose Janet Smith holds 100 shares of Macrosoft stock and 300 shares of Intelligence stock. Macrosoft stock is currently sold at \($80\) per share, while Intelligence stock is sold at \($40.\) The expected return of Macrosoft stock is 15 percent, while that of Intelligence stock is 20 percent. The standard deviation of Macrosoft is 8 percent, while that of Intelligence is 20 percent. The correlation coefficient between the stocks is 0.38.
a. Calculate the expected return and standard deviation of her portfolio.
b. Today she sold 200 shares of Intelligence stock to pay the tuition. Calculate the expected return and standard deviation of her new portfolio.
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