Exhibit 7.12
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $\begin{array} { c c } \text { Asset 1 } & \text { Asset 2 } \\\hline E \left( R _ { 1 } \right) = .12 & E \left( R _ { 2 } \right) = .16 \\E \left( \sigma _ { 1 } \right) = .04 & E \left( \sigma _ { 2 } \right) = .06\end{array}$
-Refer to Exhibit 7.12. Calculate the expected return and expected standard deviation of a two stock portfolio when r_1,2 = -.60 and w₁ = .75.

Question

Exhibit 7.12
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

\begin{array} { c c } \text { Asset 1 } & \text { Asset 2 } \\\hline E \left( R _ { 1 } \right) = .12 & E \left( R _ { 2 } \right) = .16 \\E \left( \sigma _ { 1 } \right) = .04 & E \left( \sigma _ { 2 } \right) = .06\end{array}

-Refer to Exhibit 7.12. Calculate the expected return and expected standard deviation of a two stock portfolio when r_1,2 = -.60 and w₁ = .75.

Quizplus · Accepted Answer

The correct answer is A because the expected return of the portfolio is .13 and the expected standard deviation of the portfolio is .0024.

Exhibit 712 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)