Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V

Question:

Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfect positive, uncorrelated, and perfect negative. The expected returns and standard deviations calculated for each of the assets are shown in the following table.

a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), describe the range of
(1) Expected return and
(2) Risk associated with all possible portfolio combinations.
b. If the returns of assets V and W are uncorrelated (correlation coefficient = 0), describe the approximate range of
(1) Expected return and
(2) Risk associated with all possible portfolio combinations.
c. If the returns of assets V and W are perfectly negatively correlated (correlation coefficient = -1), describe the range of
(1) Expected return and
(2) Risk associated with all possible portfoliocombinations.

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... 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...