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6. (4 points) There are two assets you are considering combining into a portfolio. You plan to hold this portfolio for one year. The potential
6. (4 points) There are two assets you are considering combining into a portfolio. You plan to hold this portfolio for one year. The potential rates of return with associated probabilities are listed below for each asset.
Probability | Peanut Butter | Jelly | |
Best | 35% | 30% | 20% |
Middle | 40% | 15% | 10% |
Worst | 25% | 5% | -10% |
If you invest 60% of your money in Jelly and the remainder in Peanut Butter, what will be the expected return and standard deviation of portfolio Peanut Butter & Jelly?
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