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Please help with Portfolio expected reurn and risk!! Thanks so much!!! 2. Portfolio expected return and risk Aa Aa An analyst is examining the following

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Please help with Portfolio expected reurn and risk!!

Thanks so much!!!

2. Portfolio expected return and risk Aa Aa An analyst is examining the following two-stock portfolio: StockPortfolio Weight Stock X Stock Y Expected Return 18.0% 11.0% Standard Deviation 35.0% 35.0% 0.55 0.45 What is the portfolio's expected return? 14.85% 13.80% 16.25% 13.45% 15.55% O O O If randomly selected stocks are added to the portfolio until the portfolio has no asset-speclfic risk remaining, which of the following is the best estimate of the portfolio's standard deviation of returns? 35% O 50% O 096 O 70% O 20% The tradeoff between risk and return is a cornerstone concept in finance. If a security offers a higher expected return, it must have hlgher risk. Look at the two stocks described in this problem. They have the same risk, but one stock has a higher expected return. Does this example contradict the tradeoff between risk and return? O No O Yes

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