Question
Suppose you invest 30% of your money in Security A and the rest in Security B Security A Security B Expected return 15% 10% Standard
Suppose you invest 30% of your money in Security A and the rest in Security B
| Security A | Security B |
Expected return | 15% | 10% |
Standard Deviation | 0.25 | 0.17 |
Beta | 1.3 | 1.1 |
Correlation coefficient between A and B | 0.5 |
a) What is the expected return of the portfolio?
b) What is the portfolio beta?
c) What is the portfolio variance? Compare it with A and B variances. Is the portfolio variance larger or smaller than either A or B variances and why?
d) What percentage of your portfolio variance comes from the interaction component of total risk?
PLEASE PROVIDE COMPLETE BREAKDONW AND EXPLAIN STEP BY STEP
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