Lily plans to construct a portfolio consisting of only two equity investments in TTT and SSS...

70.2K

Verified Solution

Question

Finance

Lily plans to construct a portfolio consisting of only twoequity investments in TTT and SSS ordinary shares. From herresearch, she finds out that these two investments have acorrelation coefficient of -0.389
She plans to invest 80% in share SSSand the remaining in share TTT. The following are additionalinformation collected in respect of these two investments:
Share TTT
Share SSS
Standard deviation:
13.39%
8.16%
Mean return:
9.10%
5.96%
Based on the portfolio investment information given above, youare required to compute the
portfolio returns
portfolio risk

Answer & Explanation Solved by verified expert

4.3 Ratings (714 Votes)

i Weight of share of SSS in portfolio W1 80 Weight ofshare of TTT in portfolio W2 1 W1 1 80 20Mean return of SSS R1 910 and Mean return of TTT See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Lily plans to construct a portfolio consisting of only twoequity investments in TTT and SSS ordinary shares. From herresearch, she finds out that these two investments have acorrelation coefficient of -0.389She plans to invest 80% in share SSSand the remaining in share TTT. The following are additionalinformation collected in respect of these two investments:Share TTTShare SSSStandard deviation:13.39%8.16%Mean return:9.10%5.96%Based on the portfolio investment information given above, youare required to compute theportfolio returns portfolio risk

	Share TTT	Share SSS
Standard deviation:	13.39%	8.16%
Mean return:	9.10%	5.96%