Suppose the expected returns and standard deviations of stock A and B are E (RA)
ID: 2681257 • Letter: S
Question
Suppose the expected returns and standard deviations of stock A and B are E (RA) = .13, E (RB) = .19, ?A = .38, and ?B = .62, respectively.Calculate the expected return and standard deviation of a portfolio that is composed of 45 percent A and 55 percent B when the correlation between the returns on A and B is .5.
Calculate the standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when the correlation coefficient between the returns on A and B is -.5.
How does the correlation between the returns on A and B affect the standard deviation of the portfolio?
Explanation / Answer
question is not clear. it has some special characters like ?A and ?B please re post the question properly thanks
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