Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. (5 pts.) Suppose we can put money into 3 investments: investment 1, investment 2 and investment 3. We have $10,000 and we plan to
3. (5 pts.) Suppose we can put money into 3 investments: investment 1, investment 2 and investment 3. We have $10,000 and we plan to put $3000 into investment 1, $5000 into investment 2 and $2000 into investment 3. The mean and standard deviation of investment returns are listed below: Return 1 Return 2 Return 3 Mean 0.08 0.12 0.1 Standard deviation 0.02 0.05 0.03 Correlation coefficients are listed below: Return 1 Return 2 Return 3 Return 1 1 -0.4 -0.2 Return 2 -0.4 1 0.6 Return 3 -0.2 0.6 1 Calculate the expected return of the portfolio and the standard deviation of portfolio return. Expected return= $1,040 Standard deviation of the return= $272.50 Note: The answer 10.4% and 2.725% are also considered as correct
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started