Calculate portfolio expected return

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Reference no: EM133056349

You are forming a two stocks portfolio which has the following characteristics.

Stock

Return %

Standard deviation

investment allocation

A

9

9

$100,000

B

12

12

$300,000

(A) Calculate portfolio expected return.

(B) Calculate portfolio standard deviation if the correlation between two asset is -1. 

(C) Describe and discuss Risk/Return Relationship. Explain why certain investments are more risky than other with example. 

(D) Discuss the concept of diversification with clear examples. If you can form a portfolio with a risky and a risk-free asset, what will be the likely impact on portfolio diversification?

Reference no: EM133056349

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