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4. The following information is available for four securities: 1 1 Stock Er 1 14% 30% 2 10% 25% 3 15% 34% 4 9% 22%
4. The following information is available for four securities: 1 1 Stock Er 1 14% 30% 2 10% 25% 3 15% 34% 4 9% 22% P 2 3 4 0.6 0.4 -0.2 1 0.2 0.5 1 0.1 1 Download (a) Calculate the expected returns and standard deviations of returns of the following two portfolios: P1 : {31%,5%, 19%, 45%} P2 : {4%, 35%, 2%,59%} (b) Which portfolio will be preferred by risk averse investors? Why
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