Portfolio R offers an expected return of 12% with a standard deviation of 20%. Portfolio S has an expected return of 8% with a standard deviation of 10%. The correlation of the portfolios' returns is 0.5.
-Refer to the information above. Mr. Reliable says that it is obvious that everyone
should want to invest only in Portfolio R since it offers a higher rate of return than
investing in any combination of Portfolio R and Portfolio S. Respond to Mr. Reliable.

Question

Quizplus · Accepted Answer

The Answer of Portfolio R offers an expected return of 12% with a standard deviation of 20%. Portfolio S has an expected return of 8% with a standard deviation of 10%. The correlation of the portfolios' returns is 0.5.
-Refer to the information above. Mr. Reliable says that it is obvious that everyone
should want to invest only in Portfolio R since it offers a higher rate of return than
investing in any combination of Portfolio R and Portfolio S. Respond to Mr. Reliable.

Portfolio R Offers an Expected Return of 12% with a Standard