Calculate expected return of a well-diversified portfolio

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Reference no: EM133633047

Case: Jessica wants to use her savings to invest in the share market. She knows that the market portfolio has a standard deviation of 30 percent and an expected return of 15 percent. The risk-free rate is 8 percent.

a) Calculate the expected return of a well-diversified portfolio with a standard deviation of 10 percent.

b) Calculate the standard deviation of a well-diversified portfolio with an expected return of 25 percent.

Reference no: EM133633047

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