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The expected return on a portfolio is simply a weighted average of the expected returns of the individual asset in the portfolio. Consider the following
The expected return on a portfolio is simply a weighted average of the expected returns of the individual asset in the portfolio. Consider the following portfolio of two assets where the correlation of returns of the assets is 0.1.
| Stock | Portfolio weight | Expected Return | Standard Deviation | Correlation |
| Microsoft | 0.4 | 12.0% | 20% | 10% |
| Coca-Cola | 0.6 | 9.5% | 12% |
Calculate the expected return of the portfolio
Calculate the expected risk of the portfolio
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