You are considering investing in two securities, X and Y, and have the following information: (a) Calculate

Question:

You are considering investing in two securities, X and Y, and have the following information:

(a) Calculate the expected return for each security separately and for a portfolio of 60 per cent X and 40 per cent Y.
(b) Calculate the expected risk of each security separately and of the portfolio as defined above if the correlation coefficient of the two returns is +0.15.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...