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Given: E(R1) = 0.12 ...

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Question

Finance

Given:

E(R1) = 0.12
E(R2) = 0.16
E(1) = 0.04
E(2) = 0.05

Calculate the expected returns and expected standard deviations of a two-stock portfolio having a correlation coefficient of 0.75 under the conditions given below. Do not round intermediate calculations. Round your answers to four decimal places.

  1. w1 = 0.10

    Expected return of a two-stock portfolio:

    Expected standard deviation of a two-stock portfolio:

Choose the correct riskreturn graph for weights from parts (a) through (e) when ri,j = -0.75; 0.00; 0.75.

The correct graph is -Select-graph A graph B graph C graph D

Graph A:

image

Graph B.

image

Graph C:

image

FE(R) F0.18 10.17 F0.16 E D -0.15 D D C C -0.14 . B 10.13 B -0.12 0.11 0.01 0.02.0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return ) = 0.75 11.2=0.75 r. 1.2 "' 12 =0.00 FE(R) F0.18 10.17 F0.16 -0.15 E D D D -0.14 10.13 -0.12 B . . -0.11 . 0.01 0.02.0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return ) = 0.75 11.2=0.75 r. 1.2 "' 12 =0.00 FE(R) F0.18 10.17 F0.16 E D -0.15 D D C -0.14 10.13 B BB -0.12 A -0.11 0.01 0.02.0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return ) = 0.75 11.2=0.75 r. 1.2 "' 12 =0.00

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