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You have a portfolio comprising of share Mickey (M) and share Donald (D). The correlation coefficient between the two shares is -0.3983. Additional information:


 

You have a portfolio comprising of share Mickey (M) and share Donald (D). The correlation coefficient between the two shares is -0.3983. Additional information: Share Mickey (M) Share Donald (D) Investment amount $200 000 $300 000 Expected return 7.55% 6.55% Beta Standard deviation 1.25 6.12% 0.95 2.07% Work with four decimals throughout your calculations and round your final answers for each question to two decimal places. 1.1 1.2 1.3 Calculate the expected return of the portfolio comprising of the share Mickey (M) and share Donald (D). Calculate the total risk (standard deviation) for the portfolio. Based on your answer in Question 1.2 and the information provided, should share M and share D be combined into one portfolio? Motivate your answer by providing two reasons. 1.4 Calculate the portfolio beta.

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