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You have just collected your lump sum from the sale of your building which amounts to GHC100,000.00 in Government of Ghana Treasury Bills (T-bills), GHC60,000.00
You have just collected your lump sum from the sale of your building which amounts to GHC100,000.00 in Government of Ghana Treasury Bills (T-bills), GHC60,000.00 in Stocks and the remaining amount in Government of Ghana Bonds Available (3) %. Stocks provide expected return of eight (8) % and a standard deviation of 20%, while Bonds provide an expected return of eight (8) % and a standard deviation 10%. Correlation coefficients between these investment vehicles are as follows:
- Between Stock and Bond = 0.25, Between Stock and T-bills= -0.08, Between Bond and T-bills = 0.15
Required:
- Expected return on the portfolio.
- Risk and coefficient of variation on the portfolio.
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