The covariance of returns between Share A and Share B is 0.0243. Share A has exhibited historical returns with a mean of 12% and standard deviation of 18%. Over the same period, Share B had average returns of 21% with a standard deviation of 27%. Calculate the expected return and standard deviation of a portfolio consisting of $50,000 in Share A and $100,000 in Share B.

The covariance of returns between Share A and Share B is 0.0243. Share A has exhibited historical returns with a mean of 12% and standard deviation of 18%. Over the same period, Share B had average returns of 21% with a standard deviation of 27%. Calculate the expected return and standard deviation of a portfolio consisting of $50,000 in Share A and $100,000 in Share B.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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