Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share...

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Finance

Ebenezer Scrooge has invested 50% of his money in share A andthe remainder in share B. He assesses their prospects asfollows:
A B
Expected return (%) 16 18
Standard deviation (%) 21 25
Correlation between returns .6
a. What are the expected return and standarddeviation of returns on his portfolio? (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places.)
Expected return %
Standard deviation %
b. How would your answer change if thecorrelation coefficient were 0 or –.6? (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places.)
Correlation
Coefficient 0 Correlation
Coefficient –.6
Standard deviation % %
c. Is Mr. Scrooge’s portfolio better or worsethan one invested entirely in share A, or is it not possible tosay?
Better
Worse
Not possible to say

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Ebenezer Scrooge has invested 50% of his money in share A andthe remainder in share B. He assesses their prospects asfollows:ABExpected return (%)1618Standard deviation (%)2125Correlation between returns.6a. What are the expected return and standarddeviation of returns on his portfolio? (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places.)Expected return%Standard deviation%b. How would your answer change if thecorrelation coefficient were 0 or –.6? (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places.)CorrelationCoefficient 0CorrelationCoefficient –.6Standard deviation%%c. Is Mr. Scrooge’s portfolio better or worsethan one invested entirely in share A, or is it not possible tosay?BetterWorseNot possible to say

	A		B
Expected return (%)	16		18
Standard deviation (%)	21		25
Correlation between returns		.6

	Correlation Coefficient 0	Correlation Coefficient –.6
Standard deviation	%	%