An investor acquires 100 A shares worth $550 each and 75 B shares at a unit price of $600. The expected returns and risks (standard deviation) of actions A and B are respectively of the order of 12% and 18%, on the one hand, and 25% and 30%, on the other hand, while the coefficient of correlation corresponds to 0.20.

1. Determine the proportions invested in each of these assets.
2. Calculate the profitability and risk of the portfolio.
3. Analyze the contributions of each asset to the profitability and risk of the portfolio.

Answer rating: 100% (QA)

To determine the proportions invested in each asset A and B we can use the concept of the capital allocation line CAL The CAL represents a combination ... View the full answer