(Optional) Consider the following assets: Asset | A E(r) Cov(A) Cov(B) Cov(X) Cov(Y) Cov(Z) В Y Z 14.71% 16.12% 18.99% 24.01% 21.17% 625 250 300 300 175 250 400 360 600 280 300 240 1600 360 900 577.5 300 600 240 490 175 280 577.5 490 1225 The assets are combined into the following portfolios: • Portfolio P: An equally weighted portfolio consisting of assets A and В.

(Optional) Consider the following assets: Asset | A E(r) Cov(A) Cov(B) Cov(X) Cov(Y) Cov(Z) В Y Z 14.71% 16.12% 18.99% 24.01% 21.17% 625 250 300 300 175 250 400 360 600 280 300 240 1600 360 900 577.5 300 600 240 490 175 280 577.5 490 1225 The assets are combined into the following portfolios: • Portfolio P: An equally weighted portfolio consisting of assets A and В.

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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Question

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5) (Optional) Consider the following assets:
Asset
A
B
X
Y
E(r)
Cov(A)
Cov(B)
Cov(X)
Cov(Y)
Cov(Z)
14.71% 16.12% 18.99% 24.01% 21.17%
625
250
300
300
175
250
400
360
600
280
300
360
900
240
577.5
300
600
240
1600
490
175
280
577.5
490
1225
The assets are combined into the following portfolios:
Portfolio P: An equally weighted portfolio consisting of assets A and
В.
Portfolio Q: An equally weighted portfolio consisting of assets X, Y
and Z.
(a) What are the expected returns of the two portfolios P and Q?
(b) What is the covariance of the two portfolios P and Q?

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