Question
You plan to invest your cash of $150,000 in GF and DSA securities. According to experts, the forecast for the next year is: * Rate
You plan to invest your cash of $150,000 in GF and DSA securities. According to experts, the forecast for the next year is: * Rate of return of the market portfolio 15% * Rate of return on treasury bills 9% * Standard deviation of market portfolio returns 4.5% *Beta coefficient of GF stock 0.75 *DSA security beta coefficient 0.85 * The covariance between the returns of GF and DSA securities 0.0018 * Expected rates of return and standard deviations of returns for DSA and GF securities are:
Expected return | Titre GF | Titre DSA |
Rendement espr | 12.40% | 13.25% |
Standard deviation of returns | 3% | 6% |
Calculate the expected return and the standard deviation of the return on your PR portfolio if you invest $90,000 of your funds in the GF stock and the rest in the DSA stock.
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