Question
Investor A wants to maximize his expected return by investing some proportion in Stock Z which has expected rate of return of 18% and standard
Investor A wants to maximize his expected return by investing some proportion in Stock Z which has expected rate of return of 18% and standard deviation of 25%. He invests remaining proportion in T-bills. Return of T-bill is 6.5%. The standard deviation on overall portfolio should not be more than 21%.What is the investment proportion in Stock Z and expected return on overall portfolio?
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Introduction To Business Statistics
Authors: Ronald M. Weiers
7th Edition
978-0538452175, 538452196, 053845217X, 2900538452198, 978-1111524081
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