Question: Below is annual stock return data on ABC Corp and XYZ, Inc. Year ABC XYZ 2010 9% -3% 2011 20% 0% 2012 -9% 20% 2013

Below is annual stock return data on ABC Corp and XYZ, Inc.

Year ABC XYZ

2010 9% -3%

2011 20% 0%

2012 -9% 20%

2013 4% 9%

The average return and standard deviation for each stock is

ABC XYZ

Average return 6% 6.5%

Standard deviation 12.3% 10.34%

What is the expected portfolio return on a portfolio comprised of

i. 25% ABC and 75% XYZ?

ii. 50% ABC and 50% XYZ?

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