Question

Chap 5 # 9: please help fill in the blanks. I am lost.

You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $250,000. Consider the summary measures in the following table: Investmentxpected Return Standard Deviation Old portfolio House 15% 27% 19% The correlation coefficient between your portfolio and the house is 0.48 a. What is the expected return and the standard deviation for your portfolio comprising your old portfolilo and the house? (Do not round intermediote calculetions. Round your final answers to 2 decimal places) Expected return Standard deviation s b. to sell the house and use the proceeds of $250,000 to buy risk-free T-bills that promise a 14% rate of return. Calculate the expected return and the standard deviation for the result correlation coefficient between any asset and the risk-free T-bills is your final answers to 2 decimal places.) ing portfolio. [Hint Note that the zero] (Do not round intermediate calculations. Round Expected return Standard deviation

Answer 1