Question: This problem asks you to compute expected return, variance and the standard deviation of returns for a portfolio of two stocks. You are an investor

This problem asks you to compute expected return, variance and the standard deviation of returns for a portfolio of two stocks. You are an investor and own a portfolio consisting of 2 stocks. The percentage of the portfolio that is invested in the first stock is 33% and the percentage of the portfolio that is invested in the second stock is 67%. The risk-free rate is 1.97%, the expected return for the first stock is 9.39% and the expected return for the second stock is 8.54%. The standard deviation of the first stock is 14.04% and the standard deviation of the second stock is 13.73%. The correlation between the stocks is 48.00%. What is the expected return on the portfolio? Write as a percentage to two decimal places/% What is the variance of the portfolio? Write the answer as a number to four decimal places What is the standard deviation of the portfolio. Write the answer as a percentage to two decimal places
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
