Question
Stocks A and B have the following returns: Stock A Stock B 1 0.11 0.05 2 0.05 0.04 3 0.14 0.05 4 0.04 0.01 5
Stocks A and B have the following returns:
| Stock A | Stock B |
| |
| 1 | 0.11 | 0.05 | |
| 2 | 0.05 | 0.04 | |
| 3 | 0.14 | 0.05 | |
| 4 | 0.04 | 0.01 | |
| 5 | 0.09 | 0.05 |
a. What are the expected returns of the two stocks?
b. What are the standard deviations of the returns of the two stocks?
c. If their correlation is 0.45, what is the expected return and standard deviation of a portfolio of 70% stock A and 30% stock B?
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
13th Edition
9780132738729, 136119468, 132738724, 978-0136119463
