You have $10,000 to invest. You decide to invest $20,000 in Google and short sell $10,000 worth
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You have $10,000 to invest. You decide to invest $20,000 in Google and short sell $10,000 worth of Yahoo! Google’s expected return is 15% with a volatility of 30% and Yahoo!’s expected return is 12% with a volatility of 25%. The stocks have a correlation of 0.9. What is the expected return and volatility of the portfolio?
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