Use the table for the question(s) below.
Consider the following expected returns, volatilities, and correlations:

-The expected return of a portfolio that is consists of a long position of $10000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:
A) 21%
B) 12%
C) 27%
D) 18%

Question

Use the table for the question(s) below.
Consider the following expected returns, volatilities, and correlations:
 
-The expected return of a portfolio that is consists of a long position of $10000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:
A) 21% 
B) 12% 
C) 27% 
D) 18%

Quizplus · Accepted Answer

D) = (10,000/8,000)(.23) + (-2000/8,8000)(.44)
= (1.25)(.23) + (-.25)(.44) = .1775

Use the Table for the Question(s) Below