You are given the following information concerning Cabinet Co., NewClear Co and the market.    Bear Market Normal Market Bull Market Probability 0.2 0.5 0.3 Cabinet Co. -20% 18% 50% NewClear Co. -15% 20% 10%   Assume that: 1. Of your R10,000 portfolio, you invest R9,000 in Cabinet Co. and R1,000 in NewClear Co. 2. NewClear and Cabinet are perfectly negatively correlated.  What is the expected return and standard deviation on your portfolio?

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Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.