a
Adequate information:
Expected return for Stock A
Expected return for Stock B
Standard deviation of Stock A
Standard deviation of Stock B
Weight of Stock A
Weight of Stock B
Correlation between Stock A and B
To compute: Expected return on the portfolio.
Introduction: Expected return on the portfolio refers to the return expected on the investment portfolio.
b
Adequate information:
Correlation between Stock A and B
To compute: Standard deviation of the portfolio.
Introduction: Standard deviation of the portfolio refers to the deviation of the actual returns from the expected returns.
c
To compute: Effect of correlation between Stock A and B on the standard deviation of the portfolio.
Introduction: Correlation refers to the degree of fluctuation of two variables in relation to one another.

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Chapter 11 Solutions
CORPORATE FINANCE - CONNECT ACCESS
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