(16 67 points Each question is equally weighted for the entire test to sum to 100 ) The Canadian Musician Artist Aubrey Drake Graham, known by his stage name Drake has invested 70 of his money in share A and the remainder in share B He assesses their prospects as follows A B Expected return ( ) 15 22 Standard deviation ( ) 20 24 Correlation between returns 4 What are the expected return and standard deviation of returns on this two share portfolio (Do not round intermediate calculations Round your answers to 2 decimal places ) E(R p ) r p x 1 r 1 x 2 r 2 (where x 1 x 2 100 of the portfolio) s p 2 x 1 2 s 1 2 x 2 2 s 2 2 2(x 1 x 2 r 12 s 1 s 2 ) s p Standard Deviation or volatility of the Portfolio s p 2 Expected return Variance Standard deviation How would your answer change if the correlation coefficient were 1, 0 or 4 (Round your answers to 2 decimal places ) What happens to the return and risk, as we change correlation coefficients

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(16.67 points Each question is equally weighted for the entire test to sum to 100 %). The Canadian Musician/Artist Aubrey Drake Graham, known by his

(16.67 points Each question is equally weighted for the entire test to sum to 100%).

The Canadian Musician/Artist Aubrey Drake Graham, known by his stage name Drake has invested 70% of his money in share A and the remainder in share B. He assesses their prospects as follows:

	A		B
Expected return (%)	15		22
Standard deviation (%)	20		24
Correlation between returns		.4

What are the expected return and standard deviation of returns on this two share portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

E(R_p)= r_p = x₁r₁ + x₂r₂ (where x₁ + x₂ = 100% of the portfolio)

s_p² = x₁²s₁² + x₂²s₂² +2(x₁x₂ r₁₂s₁s₂) =

s_p = Standard Deviation or volatility of the Portfolio = s^p²

Expected return =
Variance =
Standard deviation =

How would your answer change if the correlation coefficient were 1, 0 or .4? (Round your answers to 2 decimal places.)? What happens to the return and risk, as we change correlation coefficients?