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I need to know the math behind these answers. 5. (5 points) Consider two stocks X and Y with expected rates of return of 18%
I need to know the math behind these answers.
5. (5 points) Consider two stocks X and Y with expected rates of return of 18% and 14%, respectively. The return standard deviation of stock X is 22% and the return standard deviation of stock Y is 17%. The correlation of the returns of stocks X and Y is 0.35. An investor invests 70% of her wealth in stock X and 30% in stock Y. (1) What is her portfolio's expected rate of return? (Answer: 16.8%) (2) What is the standard deviation of her portfolio? (Answer: 17.84%)Step by Step Solution
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