Question
There are two stocks in your portfolio. Stock Weight E(r) Variance A 1/3 9% 0.0036 B 2/3 15%. 0.0081 a) Assume stock A and B
There are two stocks in your portfolio.
Stock Weight E(r) Variance
A 1/3 9% 0.0036
B 2/3 15%. 0.0081
a) Assume stock A and B are perfectly positively correlated, calculate the risk and return for your portfolio.
b) Repeat (a), assume the correlation is 0. Why is the risk now lower than in (a)?
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Entrepreneurial Finance
Authors: Philip J. Adelman; Alan M. Marks
6th edition
9780133099096, 133140512, 133099091, 978-0133140514
