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Below are the statistics for the Vanguard Total Stock Market Index Fund ETF (VTI) and the Vanguard Total Bond Market Index Fund Investor Shares (VBMFX)
Below are the statistics for the Vanguard Total Stock Market Index Fund ETF (VTI) and the Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) continuously compounded semiannual returns between the second half of 2001 and the first half of 2021. Using the information there, answer Questions 1 through 4. | |||||||
VTI | VBMFX | ||||||
Expected return | 4.351% | 2.054% | |||||
Variance | 0.01201 | 0.00059 | |||||
Correlation | -0.28653 | ||||||
Question 1 Calculate the expected return and its standard deviation of an equal-weighted portfolio of VTI and VBMFX. | |||||||
Question 2 Calculate the expected returns and their standard deviations of the portfolios of VTI and VBMFX that carry weights in VTI from -40% to 60% in increments of 5%. |
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