Ebenezer Scrooge has invested 60% of his money in share A and the remainder in share B.

Question:

Ebenezer Scrooge has invested 60% of his money in share A and the remainder in share B. He assesses their prospects as follows:

a. What are the expected return and standard deviation of returns on his portfolio?
b. How would your answer change if the correlation coefficient were 0 or -.5?
c. Is Mr. Scroogeâ€™s portfolio better or worse than one invested entirely in share A, or is it not possible tosay?

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...