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Save First Investment Fund Ltd plans to create a portfolio comprising company X and Y shares. The following information relates to these shares. X Y
- Save First Investment Fund Ltd plans to create a portfolio comprising company X and Y shares. The following information relates to these shares.
X | Y | |
Expected return | 10% | 15% |
Standard Deviation of return | 20% | 40% |
Correlation of coefficient | 0.5 |
Required:
- Calculate the expected return of the portfolio by combining 75% of the shares from Company X with the remaining shares from Company Y.
- Determine the risk of the portfolio given this combination
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