Question
Please could you show full steps and no excel please Miss M had R100,000 to invest in the financial market. She chose to invest R10,000
Please could you show full steps and no excel please
Miss M had R100,000 to invest in the financial market. She chose to invest R10,000 in Asset A, which returned 12.0%; R40,000 in Asset B which returned 15.0%; R20,000 in Asset C which returned 5.0%, and the remaining in Asset D which returned 5%. The correlation between the assets are AB = 0.75, AC = 0.35, AD = 1, BC = 0.5, BD = 0.25, and CD = -1. The standard deviations are 0.75, 0.45, 0.30, and 0.50 for A, B, C, and D respectively. To find the variance of an N -stock portfolio, you must add the entries in a NxN matrix. The diagonal cells contain variance terms (X22 ) and the off-diagonal cells contain covariance terms (XAXBAB), where XA = proportion invested in stock A and AB = covariance between stocks A and B.
A. What is the average real return for each if inflation rate is 3%?
B. Find the proportion of investment in each stock.
C. Calculate the expected returns of the portfolio.
D. What is the variance of the portfolio returns?
E. Find the standard deviation.
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