Coca Cola Walmart Probability Return Probability Return 0.1 –10% 0.2 2% 0.2 10 0.2 7 0.4 15 0.3 12 0.2 20 0.2 15 0.1 40 0.1 16 You received $2,000,000 and decided to invest $1,200,000 in Coca Cola stocks and $800,000 in stock Walmart. If the correlation of returns between Coca Cola and Walmart is 0.5, compute the following: (i) The expected return from the portfolio (ii) The standard deviation of returns from the portfolio
Coca Cola Walmart
Probability Return Probability Return
0.1 –10% 0.2 2%
0.2 10 0.2 7
0.4 15 0.3 12
0.2 20 0.2 15
0.1 40 0.1 16
You received $2,000,000 and decided to invest $1,200,000 in Coca Cola stocks and $800,000 in stock Walmart. If the correlation of returns between Coca Cola and Walmart is 0.5, compute the following:
(i) The expected return from the portfolio
(ii) The standard deviation of returns from the portfolio
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