Question
A financial advisor is recommending a portfolio consisting of two stocks, Stock A and Stock B. The expected return and standard deviation for each stock
A financial advisor is recommending a portfolio consisting of two stocks, Stock A and Stock B. The expected return and standard deviation for each stock is given below:
Stock A: Expected return: 12% Standard deviation: 15%
Stock B: Expected return: 10% Standard deviation: 20%
The financial advisor wants to achieve a portfolio expected return of 11% and a portfolio standard deviation of 18%. Calculate the weights of Stock A and Stock B in the portfolio. (10 marks)
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Investments Analysis and Management
Authors: Charles P. Jones
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