The expected return on T-bills is 5 percent and the same on the Composite index is 9.24

Question:

The expected return on T-bills is 5 percent and the same on the Composite index is 9.24 percent. Calculate the expected return and standard deviation of portfolios invested in T bills and the Composite index with weights as follows:

Wbills Wmarket

0............ 1.0

.2......... .8

.4......... .6

.6......... .4

.8......... .2

1.0......... 0

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...