ou put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55 and TB or Rf is 2%. What is the SR of the resulting portfolio?

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A: First we need to determine the systematic risk using the formula below:

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A: Optimum risk portfolio is 0.084Explanation:

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A: Expected return of a portfolio is the sum of weighted average returns of individual stocks.

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A: Beta of portfolio.Bp = (Bj * Wj)+(Bk*Wk)whereBp = beta of portfolioBj = beta of stock JBk = beta of…

Q: Stock 1 has a standard deviation of return of 6%. Stock 2 has a standard deviation of return of 2%.…

A: Formulas:

Q: You put half of your money in a stock portfolio that has an expected return of 14% and a standard…

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A: Computation of Expected Return as follows: The expected return of the portfolio =Weight of…

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A: > R -squared  = Correlation ^2> Here> Correlation = 0.72

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Q: An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected…

A: optimal risky portfolio defines the higher return on the risk basis using the Sharpe ratio including…