Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have formed a portfolio comprised of Stock A and Stock B. The expected return and standard deviation for Stock A are 2.5% and 12.8%

You have formed a portfolio comprised of Stock A and Stock B. The expected return and standard deviation for Stock A are 2.5% and 12.8% respectively. The expected return and standard deviation for Stock B are 3.3% and 7% respectively. The correlation between the two stocks is 0. Answer the following questions.

What is the expected return on a portfolio comprised of 30% Stock A and 70% stock B?

A. 2.98%

B. 2.5%

C. 3.3%

D. none of the other choices is correct.

What is the standard deviation for the same portfolio (30% in Stock A and 70% in Stock B)?

A. none of the other choices is correct

B. 6.2254%

C. 9.9%

D. 0.3876%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

What color should you use to show favorable metrics?

Answered: 1 week ago

Question

What actions do you need to take now to get there?

Answered: 1 week ago

Question

Where do you want your school to be at this time next year?

Answered: 1 week ago