Question
Suppose you are wondering whether to invest in the shares of Amazon (Security 1) or Southwest (Security 2). You decide that Security 1 offers an
Suppose you are wondering whether to invest in the shares of Amazon (Security 1) or Southwest (Security 2). You decide that Security 1 offers an expected return of 10.0% and Security 2 offers an expected return of 15.0%. After looking back at the past variability of the two stocks, you also decide that the standard deviation of returns is 26.6% for Security 1 and 27.9% for Security 2.
Calculate the expected portfolio return and standard deviation for different values of x1 and x2, assuming the correlation coefficient 12 = 0. Repeat the problem for 12 = +0.25. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
its with security one on the left and security 2 on the right
1/0.0
0.9/0.1
0.8/0.2
0.7/0.3
0.6/0.4
0.5/0.5
0.4/0.6
0.3/0.7
0.2/0.8
0.1/0.9
0/1.0
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