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As an investor you are evaluating the following two assets | ||

Asset 1 | asset 2 | |

Expected return [E(R_{i})] |
0.08 | 0.1 |

Expected standard deviation [E(S_{i})] |
0.04 | 0.06 |

Weight (W_{i}) |
0.75 | 0.25 |

Coefficient of correlation (r_{1,2}) |
-0.2 | |

For the two stock portfolio, calculate | ||

expected return | ||

standard deviation |

1. |
Expected return is 8.5% and standard deviation is .05 |
2. |
Expected return is .085 and standard deviation is .03 |
3. |
Expected return is 8.5% and standard deviation is .02 |
4. |
Expected return is 9.2% and standard deviation is .4975 |

The Expected Return and Standard Deviation is calculated below - A B C D 1 2 Expected Return of Portfolio 3 = Expected Return of Stock Asset 1 * Weigh