Consider the following expected return, variance and correlation values for the three securities listed below

Variances for the three stocks are given here (² ), you need to find the standard deviation.

(a) What is the portfolio expected return for each of the following combinations: (Note: Each portfolio has two stocks, not three!)

Portfolio A (stocks 1 and 2): W₁ = W₂ = 0.5;

Portfolio B (Stocks 1 and 3): W₁ = 0.75, and W₃ = 0.25.

(b)What are the variances and standard deviations for each portfolio as in Part a?

(c)Which of the two portfolios would you choose?Why?

Consider the following expected return , variance and correlation values for the three securities listed below 2 : ( CFA Exam ) Security E ( r ) 02 P 12 P 13 P 23 1 . 08 . 05 80 2 10 . 10 -. 20 W 12 15 .. 80