Question
In the last five years, SPYs monthly return is 0.0115 and its is 0.0498. During the same period, the bond ETF BNDs monthly return is
In the last five years, SPYs monthly return is 0.0115 and its is 0.0498. During the same period, the bond ETF BNDs monthly return is 0.0014 and 0.0094. The two ETFs have a correlation coefficient of 0.0402. 1. If you create a portfolio with 5% allocated to SPY and 95% to BND. What is this portfolios expected monthly return? What is its ? 2. Between BND and the portfolio you created in part 1, what do you choose and why? 3. If you create a portfolio with 95% allocated to SPY and 5% to BND. What is this portfolios expected monthly return? What is its ? 4. Between SPY and the portfolio you created in part 3, what do you choose and why?
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