CORPORATE FINANCE
CORPORATE FINANCE
12th Edition
ISBN: 9781307702804
Author: Ross
Publisher: MCG/CREATE
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Chapter 11, Problem 27QAP

a

Summary Introduction

Adequate information:

Expected return for Security F ERF = 0.1

Expected return for Security G ERG = 0.13

Standard deviation of Security F σF = 0.53

Standard deviation of Security G σG = 0.79

Weight of Security F WF = 0.40

Weight of Security G WG = 0.60

To compute: Expected return on the portfolio.

Introduction: Expected return on the portfolio refers to the return expected on the investment portfolio.

b

Summary Introduction

Adequate information:

Correlation between Security F and G ρF,G = 0.35

To compute: Standard deviation of the portfolio.

Introduction: Standard deviation of the portfolio refers to the deviation in the actual prices and the average price.

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Chapter 11 Solutions

CORPORATE FINANCE

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