Question

You wish to combine two stocks, Peledon and Mexcor, into a portfolio with a standard deviation of 6 percent. The expected return of Peledon is 2 percent with a standard deviation of 1 percent. The expected return of Mexcor is 25 percent with a standard deviation of 10 percent. The correlation between the two stocks is 0.4.
a. What is the composition (weights) of the portfolio?
b. What is the expected return on the portfolio?



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  • CreatedFebruary 25, 2015
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