Mean of x =0.15

Mean of y= 0.12

Variance of x= 0.20

Variance of y=0.25

Covariance of x and y= -0.2

Now assume that you form the following new variable:

u=0.5x+3

V=2y+0.5

Obtain:

Mean of u=

Mean of v=

Variance of u=

Variance of v=

Covariance of u and v=

Correlation between u and v=

Variance of portfolio invested 40% in u and remaining in v