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Suppose you have some money to investfor simplicity, $1and you are planning to put a fraction w into a stock market mutual fund and the
Suppose you have some money to investfor simplicity, $1and you are planning to put a fraction w into a stock market mutual fund and the rest 1 - w, into a bond mutual fund. Suppose that $1 invested in a stock fund yields Rs after 1 year and that $1 invested in a bond fund yields Ro, suppose that Rg is random with mean 0.08 (8%) and standard deviation 0.07, and suppose that Rois random with mean 0.05(5%) and standard deviation 0.04. The correlation between Rs and Rg is 0.24. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R=WR + (1 - w)R, Suppose that w = 0.47. Compute the mean and standard deviation of R. The mean is (Round your response to three decimal places.) The standard deviation is (Round your response to three decimal places.)
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