Question: Question No 2 (5 Marks) (Assume a value within the given range) Given: E ( R 1 ) = W i.e. between (12% - 17%)

Question No 2 (5 Marks)

(Assume a value within the given range)

Given:

E(R₁) = W i.e. between (12% - 17%)

E(R₂) = X i.e. between (18% - 22%)

₁ = Y i.e. between (5% - 7%)

₂ = Z i.e. between (8% - 10%)

a. Calculate the expected returns and expected standard deviations of a two-stock portfolio in which Stock 1 has a weight of 40 percent under the following conditions:

r_1,2 = A i.e. between (0.2 to 0.5)
r_1,2 = 0 i.e. zero
r_1,2 = B i.e. between (-0.9 to -0.7)

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