4.You want to combine the following two stocks into a portfolio: Nike and Microsoft. The last seven years of returns are listed below. The correlation between the two stocks is 0.65. You willput 54% of your money into Nike and 46% into Microsoft. What would be the expected return and standard deviation of returns of your portfolio? 3a -7%a 3%a 40 20 52% 40%a -15%aa 1%a 19%a 12%a 14%a Nike 22%a 24%a Microsofta 16%a -8% -7%a
4.You want to combine the following two stocks into a portfolio: Nike and Microsoft. The last seven years of returns are listed below. The correlation between the two stocks is 0.65. You willput 54% of your money into Nike and 46% into Microsoft. What would be the expected return and standard deviation of returns of your portfolio? 3a -7%a 3%a 40 20 52% 40%a -15%aa 1%a 19%a 12%a 14%a Nike 22%a 24%a Microsofta 16%a -8% -7%a
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:4.You want to combine the following two stocks into a portfolio: Nike and Microsoft. The
last seven years of returns are listed below. The correlation between the two stocks is
0.65. You willput 54% of your money into Nike and 46% into Microsoft. What would
be the expected return and standard deviation of returns of your portfolio?
3a
-7%a
3%a
40
20
52%
40%a
-15%aa
1%a
19%a
12%a
14%a
Nike
22%a
24%a
Microsofta
16%a
-8%
-7%a
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