A) Suppose you purchase $1,000 of security A and purchase $500 of security B. If these...
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A) Suppose you purchase $1,000 of security A and purchase $500 of security B. If these transactions constitute your entire portfolio, what are the portfolio weights for each component of the portfolio? B) Compute the variance and expected return of the portfolio in Question (A), given the following additional information. B. Variance 25 49 E(r) 10 16 The correlation of A and B is 0.70. C) If there is a positive covariance between securities A and B, and security A produces a return above its expected rate of return, what does that do to your expectations for security B? A) Suppose you purchase $1,000 of security A and purchase $500 of security B. If these transactions constitute your entire portfolio, what are the portfolio weights for each component of the portfolio? B) Compute the variance and expected return of the portfolio in Question (A), given the following additional information. B. Variance 25 49 E(r) 10 16 The correlation of A and B is 0.70. C) If there is a positive covariance between securities A and B, and security A produces a return above its expected rate of return, what does that do to your expectations for security B?
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