Question: There are two assets D and E with returns Rd and Re. They are both risky so returns fluctuates. And the standard deviation of the

There are two assets D and E with returns Rd and Re. They are both risky so returns fluctuates. And the standard deviation of the returns of each asset is Sig_d and Sig_e. The portfolio has the two assets in it with equal weights. So the Wd = 1/2, and We = 1/2. Covariance of the 2 asset is Cov(Rd,Re) = Cov. What is the variance of the portfolio? There are two assets D and E with returns Rd and Re. They are both risky so returns fluctuates. And the standard deviation of the returns of each asset is Sig_d and Sig_e. The portfolio has the two assets in it with equal weights. So the Wd = 1/2, and We = 1/2. Covariance of the 2 asset is Cov(Rd,Re) = Cov. What is the variance of the portfolio? 1/4 (Sig_d)^2 +1/4 (Sig_e)^2 + 1/2 cov(Rd, Re) 1/4 (Sig_d)^2 +1/4 (Sig_e)^2 1/4 (Sig_d)^2 +1/4 (Sig_e)^2 + 1/4 cov(Rd, Re) 1/2 (Sig_d)^2 +1/2 (Sig_e)^2 + 1/2 cov(Rd, Re)

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