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Information on stocks G&H which have a correlation coefficient of 0.5 annear helnow: Your uncle has savings of $20,000 and was thinking of investing 80%
Information on stocks G&H which have a correlation coefficient of 0.5 annear helnow: Your uncle has savings of $20,000 and was thinking of investing 80% of this amount in stock G and the remainder in stock H. Required: a. Calculate the expected return and standard deviation of your uncle's portfolio. (5 marks) b. Demonstrate by appropriate calculations whether or not diversification has been achieved by combining these two stocks in a portfolio (4 marks) c. Your uncle is worried about taking risks as he is close to retirement age. Advise him on what actions he could take to establish a portfolio that is jess risky. Provide calculations to show that the proposed portfolio is less risky
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