The expected return on Big Time Toys is 12% and its standard deviation is 20.6%. The expected return on Chemical Industr
Posted: Sat Feb 26, 2022 9:07 am
The expected return on Big Time Toys is 12% and its standard
deviation is 20.6%. The expected return on Chemical Industries is
11% and its standard deviation is 25.9%.
a. Suppose the correlation
coefficient for the two stocks' returns is 0.23. What are the
expected return and standard deviation of a portfolio with 38%
invested in Big Time Toys and the rest in Chemical
Industries? (Round your answers to 2 decimal
places.)
b. If the correlation coefficient is
0.73, recalculate the portfolio expected return and standard
deviation, assuming the portfolio weights are
unchanged. (Round your answers to 2 decimal
places.)
c. Why is there a slight difference
between the results, when the correlation coefficient was 0.23 and
when it was 0.73?
deviation is 20.6%. The expected return on Chemical Industries is
11% and its standard deviation is 25.9%.
a. Suppose the correlation
coefficient for the two stocks' returns is 0.23. What are the
expected return and standard deviation of a portfolio with 38%
invested in Big Time Toys and the rest in Chemical
Industries? (Round your answers to 2 decimal
places.)
b. If the correlation coefficient is
0.73, recalculate the portfolio expected return and standard
deviation, assuming the portfolio weights are
unchanged. (Round your answers to 2 decimal
places.)
c. Why is there a slight difference
between the results, when the correlation coefficient was 0.23 and
when it was 0.73?