Suppose you have some money to invest - for simplicity, $1 - and you are planning to put a fraction w into a stock marke
Posted: Sun Sep 05, 2021 5:21 pm
Suppose you have some money to invest - for simplicity, $1 - and
you are planning to put a fraction w into a stock market mutual
fund and the rest, 1 - w, into a bond mutual fund. Suppose that $1
invested in a stock fund yields Rs after 1 year and that $1
invested in a bond yields Rb, suppose that Rs is random with mean
0.07 (7%) and standard deviation 0.06, and supposed Rb is random
with mean w of your money in the stock fund and the rest, 1 -w, in
the bond fund, then the return on your investment is R = wRs +
(1-w)Rb.
Suppose that w = 0.44. Compute the mean and standard
deviation of R.
you are planning to put a fraction w into a stock market mutual
fund and the rest, 1 - w, into a bond mutual fund. Suppose that $1
invested in a stock fund yields Rs after 1 year and that $1
invested in a bond yields Rb, suppose that Rs is random with mean
0.07 (7%) and standard deviation 0.06, and supposed Rb is random
with mean w of your money in the stock fund and the rest, 1 -w, in
the bond fund, then the return on your investment is R = wRs +
(1-w)Rb.
Suppose that w = 0.44. Compute the mean and standard
deviation of R.