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

-The expected return of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:

Question

Use the table for the question(s)below.
Consider the following expected returns,volatilities,and correlations:
 
-The expected return of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:

Quizplus · Accepted Answer

The expected return of the portfolio can be calculated as 
(0.08*10000) - (0.12*2000) = 680
The expected return of the portfolio is $680 or 6.8%.
Therefore, the closest option is D)18%.

Use the Table for the Question(s)below