Score: 0.3 of 1 pt 5.4.55 E Question Help Suppose that you want to create a port

Question

Score: 0.3 of 1 pt 5.4.55 E Question Help Suppose that you want to create a portfolio that consists of a corporate bond fund, X, and a common stock fund, Y. For a $1,000 investment, the expected return for X IS $71 and the expected return for Y is $99. The variance for X is 1,500 and the variance for Y is 11,650. The covariance of X and Y is 4,002. Complete parts (a) through (d). b. Compute the portfolio expected return and portfolio risk if you put $500 in each fund. The portfolio expected return is $ 85 (Type an integer or a decimal) The portfolio risk is $ 72.72 (Round to two decimal places as needed.) c. Compute the portfolio expected return and portfolio risk if you put $700 in the corporate bond fund and $300 in the common stock fund The portfolio expected retum is $ (Type an integer or a decimal.) Enter your answer in the answer box and then click Check Answer. 2 parts Clear All Z remaining Check Answer

Explanation / Answer

c) In this case, the portfolio expected return

= 700 * 71/1000 + 300 * 99/1000

= 79.4

Hence,

The portfolio expected return is $ 79.4

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