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Phillip is currently holding a portfolio of one share and one bond as follow: Return Standard deviation Beta Weight Bond 7% 6% 0.35 40% Share
Phillip is currently holding a portfolio of one share and one bond as follow: Return Standard deviation Beta Weight Bond 7% 6% 0.35 40% Share 14% 14% 1.15 60% The correlation between bond and share is 0.1. Required: A - Calculate the portfolio return. B - Calculate the portfolio's risk measured by both standard deviation and beta. C - If the market rate is 10%, risk free rate is 4%, is the portfolio overpriced or under-priced? Should Phillip sell it or continue to hold it
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