Question
A stock (S) has an expected return of 15% and standard deviation of 5%. A bond (B) has an expected return of 10% and standard
A stock (S) has an expected return of 15% and standard deviation of 5%. A bond (B) has an expected return of 10% and standard deviation of 2%. Correlation coefficient between S and B is 0.2. An investor wants to allocate 25% of her portfolio to S and the remainder of her portfolio to B. What is the expected return and variance of this portfolio?
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Financial Markets And Institutions
Authors: Jeff Madura
8th Edition
0324568215, 978-0324568219
