You have ($9800) to invest. You decide to invest ($19,000) in Google and short sell ($9200) worth

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You have \($9800\) to invest. You decide to invest \($19,000\) in Google and short sell \($9200\) worth of Yahoo! Google’s expected return is 14% with a volatility of 27% and Yahoo!’s expected return is 14% with a volatility of 27%. The stocks have a correlation of 0.92. What is the expected return and volatility of the portfolio?

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Corporate Finance

ISBN: 9781292446318

6th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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