Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor owns a portfolio of two stocks x and y , the expected return and standard deviation of returns of the two stocks are

An investor owns a portfolio of two stocks x and y, the expected return and standard deviation of returns of the two stocks are E(Rx)=5%, E(Ry)=10%, Sx =10%, Sy =12.5% respectively. The covariance of the returns is COVxy =.009375. The investor invests Rs1,500 in stock x and Rs1,000 in stock y. What is the expected return of the portfolio?
Select one:
a.11.25%
b.7.0%
c.7.5%
d.11.0%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Institutions Investments And Management An Introduction

Authors: Herbert B. Mayo

8th Edition

0324178174, 9780324178173

More Books

Students also viewed these Finance questions