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Following is the scenario analysis for stocks X and Y, a. What are the expected rates of return and standard deviations for stocks X and
Following is the scenario analysis for stocks X and Y, a. What are the expected rates of return and standard deviations for stocks X and Y ? b. Assume that of your 10,000 portfolio, you invested 9,000 in stock X and 1,000 in stock Y. What is the expected return on your portfolio? c. If the correlation between the two stocks is +1,0.5 and 1, respectively, what would be your portfolio's risk? d. Discuss the diversification effect based on your answer in part c
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