Question: Question 1 The expected returns and standard deviation of returns for two securities are as follows. Expected return Standard deviation Security Z 15% 20% Security

Question 1 The expected returns and standard deviation of returns for

Question 1 The expected returns and standard deviation of returns for two securities are as follows. Expected return Standard deviation Security Z 15% 20% Security Y 35% 40% The correlation between the returns is 0.25. a) Calculate the expected return and standard deviation for the following portfolios. i. 100% in z ii. 75% in Z and 25% in Y iii. 50% in Z and 50% in Y iv. 25% in Z and 75% in Y V. 100% in Y b) Plot these portfolios in risk-return space. (That is, your solution should be a graph. You may do this by hand, in Excel, or otherwise.)

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