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Question B. You have recently received $100,000 and you are considering investing $40,000 in the JMMB and $60,000 in CPJ. Your analysis of each stock

Question B.

You have recently received $100,000 and you are considering investing $40,000 in the JMMB and $60,000 in CPJ. Your analysis of each stock revealed the following information. The Expected Returns of both companies are 11% and 15% respectively and the Standard Deviations are 8% and 11% respectively. The correlation between the companies is 0.75.

i. Compute the expected return of the portfolio (3 marks) ii. Compute the standard deviation of the portfolio (7 marks)

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