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3.Eunice has a $800,000 portfolio. She inherits YUM Inc. common stocks worth $200,000, which increase her total wealth to $1,000,000. Her financial advisor provided her
3.Eunice has a $800,000 portfolio. She inherits YUM Inc. common stocks worth $200,000, which increase her total wealth to $1,000,000. Her financial advisor provided her with the following estimates. The correlation coefficient of YUM stock returns with the original portfolio is 0.4. (Chapter 7) Risk and Return Characteristics Expected Return Standard Deviation Original Portfolio 1.2% 2.35% ABC Company Stocks 1.8% 2.50% Eunice decided to keep the YUM Inc. stocks and put it with her original portfolio. Please compute a. Expected return of her new portfolio, which includes YUM stocks b. Covariance of YUM portfolio and original portfolio c. Standard deviation of her new portfolio, which includes YUM stocks
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