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:Question 1
The following data on two stocks:
Stock 1
Stock 2
Expected return
Standard deviation
10%
20%
14%
40%
Required:
Calculate the expected return and standard deviation of the Sollowing portfolios, where w1
represents the fractions invested in stock 1, and w2 represents the fraction invested in stock
2.
w1
w2
E (R)
Standard Deviation
75%
50%
25%
25%
50%
75%
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