Question
suppose Janet Smith holds 100 shares of Microsoft stock and 300 shares of Intelligence stock. Microsoft stock is currently trading at $80 per share, while
suppose Janet Smith holds 100 shares of Microsoft stock and 300 shares of Intelligence stock. Microsoft stock is currently trading at $80 per share, while Intelligence stock trades at $40. The expected return of Microsoft is 15 percent, while that of Intelligence is 20 percent. The standard deviation of Microsoft is 8 percent, while that of Intelligence is 20 percent. The covariance between the stocks is 0.00608? (a) Calculate the expected return and standard deviation of her portfolio. (b) Today she sold 200 shares of Intelligence to pay her tuition. Calculate the expected return and standard deviation of her new portfolio.
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