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QUESTION 1 You are considering two risky assets to form your portfolio. The expected rate of returns, standard deviations and correlation between two assets are
QUESTION 1 You are considering two risky assets to form your portfolio. The expected rate of returns, standard deviations and correlation between two assets are given below. ER-Asset A)=7%, Standard Deviation- Asset A- 12%; E(R-Asset B)=12%, Standard Deviation- Asset B-18%; Correlation between two assets is 0.3. Please answer the following questions: (1) If you invest $4,800 in Asset A and $5,200 in Asset B, what is the weight in Asset A? (Planse input your answer to the second decimal, e.g. 0.00) (2) If you invest $4,800 in Asset A and $5,200 in Asset B, what is the weight in Asset B? (Please input your answer to the second decimal, e.g. 0.00) (3) If you invest $4,800 in Asset A and $5,200 in Asset B, what is the expected rate of return for your portfolio? Please round your answer to the fourth decimal, e.g. 0.0000) (4) If you invest $4,800 in Asset A and $5,200 in Asset B, what is the standard deviation for your portfolio? (Please round your answer to the fourth decimal, e.g. 0.0000)
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