Calculate the expected monthly return

Reference no: EM131928625

Question: One hundred percent of your money is invested in Stock A. You decide to move half of your money in Stock B, while leaving the reaming half in Stock A. The correlation between Stock A and Stock B is 0.15.

A. Calculate the expected monthly return.

B. Calculate the standard deviation.

You decide to move 85% of your money into an index fund and keep 15% into Stock A. The correlation between the index and Stock A is 0.6.

C. Calculate the expected monthly return.

B. Calculate the standard deviation.

Calculate the Sharpe Ratio for your initial portfolio and both proposed portfolios.

Expected Monthly Returns Standard Dev. of Monthly Returns

Stock A = 4.25% 11%

Stock B = 1.50% 5%

Index Fund = .30% .65%

Reference no: EM131928625

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