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Ms. Chan has picked 2 stocks to invest in: Wings Limited and Happy Group. Ms. Chan decides to invest $200,000 in Wings Limited and 300,000

Ms. Chan has picked 2 stocks to invest in: Wings Limited and Happy Group. Ms. Chan decides to invest $200,000 in Wings Limited and 300,000 in Happy Group in her portfolio. Some information about the 2 stocks is shown in the table below:

Expected Return

Standard Deviation

Covariance

Wings Limited

15%

28%

0.0112

Happy Group

6%

11%

Inflation rate is 2% p.a.

Risk-free rate is 3% p.a.

A.Calculate the expected return of Ms. Chans portfolio.

B.Calculate the standard deviation of Ms. Chans portfolio.

C.Calculate the risk premiums of Wings Limited and Happy Group.

D.Calculate the correlation coefficient of Wings Limited and Happy Group.

E.If Ms. Chan wants to achieve an expected return of 11.4% for her portfolio, how much (in percentage) should she invest in Wings Limited and Happy Group?

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