A portfolio offers an expected annual return of 10% and a standard deviation of 25%. The probability distribution of returns is normal.
What is the probability that this portfolio will give a return less than 10% over the next year?
(a) 0.50
(b) 0.35
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a. The expected rate of return for portfolio A is:
The standard deviation of portfolio A is:
b. The expected rate of return for portfolio B is:
The standard deviation for portfolio B is:
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Consider the following 6 months of returns for 2 stocks and a
portfolio of those 2 stocks:
The
portfolio is composed of 50% of Stock A and 50% of Stock
B.
a. What is the expected return and standard deviation of returns
for each of the two stocks?
b. What is the expected return and standard deviation of returns
for the portfolio?
c. Is the portfolio more or less risky than the two stocks?
Why?
this is the entire question...
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