Question: Please provide EXCEL formula on how to solve this problem Suppose the expected returns and standard deviations of Stocks A and B are E( R

Please provide EXCEL formula on how to solve this problem

Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .086, E(RB) = .146, A = .356, and B = .616.

a-1.

Calculate the expected return of a portfolio that is composed of 31 percent Stock A and 69 percent Stock B when the correlation between the returns on A and B is .46. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

a-2.

Calculate the standard deviation of a portfolio that is composed of 31 percent Stock A and 69 percent Stock B when the correlation between the returns on A and B is .46. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b.

Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on Stocks A and B is .46. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

a-1 Expected return ______________%

a-2 Standard Deviation ______________%

b. Standard deviation ________________%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!