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5. You decided to make an investment and construct a portfolio that consists of the stocks that became your favorite brands during Covid-19 pandemic lockdown
5. You decided to make an investment and construct a portfolio that consists of the stocks that became your favorite brands during Covid-19 pandemic lockdown days: Netflix and McDonalds. Consider the data shown in the table below. Assume that the risk free interest rate is 12% and the correlation between two risky stocks is -0.6. Stock Weights in the portfolio Expected Return Standard Deviation Netflix Inc. (NFLX) 60% 21% 0.56 McDonald's Corp. (MCD) 40% 17% 1.3 a. Calculate the expected return and risk of this portfolio. (6 pts) b. What are the risks that the holder of the portfolio is subject to? List and briefly explain each of them. (4 pts)
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