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Investing in stocks Inputs Fractions invested in stocks Stock 1 0.25 Stock 2 0.25 Stock 3 0.25 Stock 4 0.25 Distributions of returns (assumed normal)

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Investing in stocks Inputs Fractions invested in stocks Stock 1 0.25 Stock 2 0.25 Stock 3 0.25 Stock 4 0.25 Distributions of returns (assumed normal) Mean Stdev Stock 1 15% 20% Stock 2 10%% 12% Stock 3 25% 40% Stock 4 16%% 20%% Stock 1 and Stock 2 are correlated and the correlation is 0.8

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