Question: Expected Return A: 7.5% B:10% Standard deviation: A: 5% B: 15% Investor invest $50,000 in a portfolio consisting of A and B. $10,000 of that

Expected Return

A: 7.5% B:10%

Standard deviation:

A: 5% B: 15%

Investor invest $50,000 in a portfolio consisting of A and B.

$10,000 of that investment was funded with risk free borrowing.

The expected return of the investor's portfolio is 9.375%

  1. calculate the dollar amounts invested in each of X and Z
  2. If the correlation between A and B is 1/3, what is the standard deviation of the investor's portfolio?

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