Question: Ch 08: Assignment - Risk and Rates of Return Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio Consider the

Ch 08: Assignment - Risk and Rates of Return Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio Consider the following case: Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table Percentage of Portfolio 20% Standard Deviation Stock 35.00% Artemis Inc Babich Co Comel Industries 304 Expected Return 3.00% 14.00% 11.00% 5.00% 39.00% 42.009 35% 15% Danforth Motors 40.00% What is the expected retum on Andre's stock portfolio? O O 10.40% 7.80% 15.60% 14.04% What the expected return on Andre's stock portfolio? O O 10.40% 7.80 15.60% 14.04% Suppose each stock in Andre's portfolio has a correlation coefficient of 0.4 (p = 0.4) with each of the other stocks. If the weighted average of the risk of the individual securities (as measured by their standard deviations) included in the partially diversified four-stock portfolio is 40%, the portfolio's standard deviation () most likely is 404

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