1. John’s portfolio consists of $1000 in XYZ stock and $4000 in ABC. Historically XYZ has had an average return of 16% annually with a standard deviation of 30%. Historically ABC has an average return of 24% annually with a standard deviation of 40%. The correlation between the 2 stocks has been 0.4.

a) What is the expected return (based on historical averages) of John’s portfolio

b) What is the standard deviation of John’s portfolio?

Answer rating: 100% (QA)

A b Stock XYZ Weight 1000 5000 020 Stock ABC Weight 400... View the full answer