You are considering whether to invest in two stocks, Stock A and Stock B. Stock A has

Question:

You are considering whether to invest in two stocks, Stock A and Stock B. Stock A has a beta of 1.15 and the standard deviation of its returns has been estimated to be 0.28. For Stock B, the beta is 0.84 and standard deviation is 0.48.
a. Which stock is riskier?
b. If the risk-free rate is 4% and the market risk premium is 8%, what is the for a that is composed of 60% A and 40% B?
c. If the correlation between the returns of A and B is 0.50, what is the standard deviation for the that includes 60% A and 40% B? 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...