FinCorp Inc wishes to examine the effect of correlation on the efficient frontier that can be created by investing in ABC and FGI The expected return of ABC is 6 percent, with a standard deviation of 10 percent The expected return of FGI is 10 percent, with a standard deviation of 25 percent Graph ...

A sample of the data from Excel Expected returns ABC 006 FGI 01 Difference in expected returns 004 ...

FinCorp Inc. wishes to examine the effect of correlation on the efficient frontier that can be created

Question:

FinCorp Inc. wishes to examine the effect of correlation on the efficient frontier that can be created by investing in ABC and FGI. The of ABC is 6 percent, with a standard deviation of 10 percent. The of FGI is 10 percent, with a standard deviation of 25 percent. Graph the efficient frontier for
a. A correlation of 0.0
b. A correlation of −0.5
c. A correlation of 0.5

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...