Question
At the beginning of 2020 you invest $3,000 in Microsoft (MSFT) stock and $5,000 in Proctor and Gamble (PG) stock. Suppose you expect the monthly
At the beginning of 2020 you invest $3,000 in Microsoft (MSFT) stock and $5,000 in Proctor and Gamble (PG) stock.
Suppose you expect the monthly return to be 1.2% for MSTF and 0.5% for PG and the standard deviation of monthly returns to be 11.6% for MSTF and 6.5% for PG, and that the correlation of the returns on the two stock is 0.18.
- What are the expected monthly return on your portfolio and its stand dard deviation?
- Compare and discuss the return and standard deviation of the portfolio to the return and standard deviation of the two individual stocks.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Portfolio Return and Standard Deviation Analysis 1 Expected monthly return on the portfolio To calculate the expected return of the portfoliowe need t...
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Accounting Tools for business decision making
Authors: kimmel, weygandt, kieso
4th Edition
978-0470117262, 9780470534786, 470117265, 470534788, 978-0470095461
