Richard has two investment opportunities. He can invest in The Sunglasses Company or The Umbrella Company. If he diversifies his investment by putting 50% of his money into each company.

 What is the expected return and standard deviation of his portfolio?

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State of the Probability of the Expected Return Economy State Sunglasses Company Sunny Rainy .50 .50 13% 24% Expected Return Umbrella Company 23% 14% State of the Probability of the Expected Return Economy State Sunglasses Company Sunny Rainy .50 .50 13% 24% Expected Return Umbrella Company 23% 14%

Answer rating: 100% (QA)

To calculate the expected return of the portfolio we multiply each compan... View the full answer