A market consists of only two stocks, X and Y. The market cap of X is $3bn and that of Y is $7bn. X has an expected retu

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answerhappygod
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A market consists of only two stocks, X and Y. The market cap of X is $3bn and that of Y is $7bn. X has an expected retu

Post by answerhappygod »

A market consists of only two stocks, X and Y. The market cap of
X is $3bn and that of Y is $7bn. X has an expected return of 10%
and a return standard deviation of 32%. Y has an expected return of
8% and a standard deviation of 20%. Their return correlation is
0.25.
i) What is the expected return on the market and the
return standard deviation of the market
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