Stocks A and B have expected returns 8% and 10%, and standard deviation of returns of 20% each. If they are uncorrelat

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answerhappygod
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Stocks A and B have expected returns 8% and 10%, and standard deviation of returns of 20% each. If they are uncorrelat

Post by answerhappygod »

Stocks A and B have expected returns 8% and 10%, and standard
deviation of returns of 20% each. If they are
uncorrelated, then the portfolio variance is given by
wA2σA2 +
wB2σB2. What are
the portfolio mean return and risk (standard deviation) if the
weights are 60-40 (in favour of A)?
Question 3 options:
8.8%, 14%
9.2% 20%
9.2%, 14%
8.8%, 20%
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