Suppose Targets stock has an expected return of 20 and a volatility of 40 , Hersheys stock has an expected return of 12 and a volatility of 30 , and these two stocks are uncorrelated a What is the expected return and volatility of an equally weighted portfolio of the two stocks Consider a new stock...

a A B Corr ER 20 12 Vol 40 30 0 XA XB Vol ER 50 50 ...

Suppose Targets stock has an expected return of 20% and a volatility of 40%, Hersheys stock has

Question:

Suppose Target’s stock has an of 20% and a volatility of 40%, Hershey’s stock has an of 12% and a volatility of 30%, and these two are uncorrelated.
a. What is the and volatility of an equally weighted of the two Consider a new stock with an of 16% and a volatility of 30%. Suppose this new stock is uncorrelated with Target’s and Hershey’s stock.
b. Is holding this stock alone attractive compared to holding the in (a)?
c. Can you improve upon your in (a) by adding this new stock to your Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...