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you have the following information: Stock Expected Return Standard Deviation J 7% 16% W 10% 20% Calculate the expected return and the standard deviation of
you have the following information:
| Stock | Expected Return | Standard Deviation |
| J | 7% | 16% |
| W | 10% | 20% |
- Calculate the expected return and the standard deviation of a portfolio that is equally invested in both stocks. Assume the correlation between two stock returns is 0.22.
- Calculate the expected return and the standard deviation of a portfolio that invests 20% of the money in Stock J, and the rest in Stock W. Assume the correlation between two stock returns is 0.22.
- If the correlation between the two stocks increases, what happens to the expected return of the portfolio? Does the expected return rise or fall?
- If the correlation between the two stocks increases, will the standard deviation of the portfolio rise or fall?
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Financial Transformations Beyond The Covid 19 Health Crisis
Authors: Sabri Boubaker, Duc Khuong Nguyen
1st Edition
1800610777, 978-1800610774
