You are considering investing in two companies, Company A and Company B. The expected returns and standard
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You are considering investing in two companies, Company A and Company B. The expected returns and standard deviations of the returns of the two companies are as follows:
Company A: Expected return = 8%, Standard deviation = 15%
Company B: Expected return = 12%, Standard deviation = 20%
You have a budget of $100,000 to invest. You want to allocate your money between the two companies in such a way as to minimize your risk while achieving a target expected return of 10%. What is the optimal allocation of your money between Company A and Company B?
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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