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Astrid has the following two investments in her portfolio: Investment Expected Return Standard Deviation Beta % Weighting M 12% 3.1% 1.40 55% N 19% 3.9

Astrid has the following two investments in her portfolio:

Investment Expected Return Standard Deviation Beta % Weighting
M 12% 3.1% 1.40 55%
N 19% 3.9 0.85 45
  1. Which investment is riskier by itself and in a portfolio sense?

  2. What is the expected return of the portfolio?

  3. With a correlation coefficient of +0.30, what is the standard deviation of the portfolio?

  4. What is the beta of the portfolio?

  5. What is the significance of the results in parts a through d?

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