Question
You wish to combine two stocks, Encor and Maestro, into a portfolio with an expected return of 15.4 percent. The expected return of Encor is
You wish to combine two stocks, Encor and Maestro, into a portfolio with an expected return of 15.4 percent. The expected return of Encor is 1.4 percent with a standard deviation of 1 percent. The expected return of Maestro is 23.8 percent with a standard deviation of 9.4 percent. The correlation between the two stocks is 0.4.
What is the composition (weights) of the portfolio? (Round answer to 4 decimal places, e.g. 14.5125%.)
| Weight in Encor | % | |
| Weight in Maestro | % |
What is the portfolio standard deviation? (Round intermediate calculations to 7 decimal places, e.g. 0.5125129 and the final answer to 4 decimal places, e.g. 14.5125%.)
| Standard deviation | Type your answer here % |
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Basic Finance An Introduction To Financial Institutions Investments And Management
Authors: Herbert B. Mayo, Michael J Lavelle
13th Edition
0357714741, 978-0357714744
