Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.0%. EIR SDIRI 16.0% Johnson & Johnson 7.0% Walgreen Company 10.0% 20.0% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is %. (Round to one decimal place.)
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.0%. EIR SDIRI 16.0% Johnson & Johnson 7.0% Walgreen Company 10.0% 20.0% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is %. (Round to one decimal place.)
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
Transcribed Image Text:Suppose Johnson & Johnson and the Walgreen Company have the expected retums and volatilities shown below, with a correlation of 22.0%.
EIR
7.0%
SD(R
16.0%
20.0%
Johnson & Johnson
Walgreen Company
10.0%
For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate:
a. The expected return.
b. The volatility (standard deviation).
a. The expected return.
The expected return of the portfolio is %. (Round to one decimal place.)
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