Investments, 11th Edition (exclude Access Card)
Investments, 11th Edition (exclude Access Card)
11th Edition
ISBN: 9781260201543
Author: Zvi Bodie Professor; Alex Kane; Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 7, Problem 4PS
Summary Introduction

To calculate: The minimum of the investment proportions in the risky portfolio among the two risky funds is to be determined along with that expected value and the standard deviation of the rate of return are also to be determined.

Introduction: The portfolio risk is defined as the combination of assets which carries its own risk with each investment.

The standard deviation is used to determine that in which manner the values from a data set vary from its mean value. This is calculated by the square root of the variance.

  standard deviation=variance

The expected return is defined as the return which is obtained on the risky asset that is expected in future.

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