Stock A has an expected return of 16 percent,and stock B has an expected return of 8 percent.However,the risk of stock A as measured by its variance is 3.2 times that of stock B.If the two stocks are combined equally in a portfolio,what would be the portfolio's expected return?
A)11.50%
B)9.50%
C)12.00%
D)8.25%
E)14.10%

Question

Quizplus · Accepted Answer

Rp = 0.5(0.16)+ 0.5(0.08)= 0.12,or 12%

Stock a Has an Expected Return of 16 Percent,and Stock