Pallavi is interested to construct a portfolio of Securities X and Y. She has collected...
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Pallavi is interested to construct a portfolio of Securities X and Y. She has collected the following information: Pallavi has 5 portfolio options of X and Y as follows: (i) 50% of funds in each X and Y. (ii) 75% of funds in X and 25% in Y. (iii) 25% of funds in X and 75% in Y. (iv) 60% of funds in X and 40% in Y. (v) 35% of funds in X and 65% in Y. Co-efficient of correlation (r) between X and Y is 0.16. You are required to calculate: a. Expected Return & Risk under different Portfolio Options. (5 Marks) b. Which Portfolio is best from the point of view of Risk & which Portfolio is best from the point of view of Return? (5 Marks)
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