Question: The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd. are shown below. Expected Return Chihuahua Labrador 14% 9% Standard Deviation
The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd. are shown below. Expected Return Chihuahua Labrador 14% 9% Standard Deviation of Returns 42% 22% Correlation(Chihuahua, Labrador) = 0.40 You have $10,000 to invest, and are trying to decide how much money to invest in each of the two companies. Calculate the expected return and standard deviations for the following mixtures: a. $7,000 of Chihuahua stock, and $3,000 of Labrador stock b. $5,000 of Chihuahua stock, and $5,000 of Labrador stock c. $2,000 of Chihuahua stock, and $8,000 of Labrador stock
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