Calculate the expected portfolio return

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Reference no: EM13833690

Abba investments wants to invest in securities C and D of firms in two different industries. The following information relates to the two securities.

C D

Expected return 14% 12%

Standard deviations 5 3

Beta 1.70 1.20

Amount of money invested Shs 720,000 Shs 480,000

REQUIRED:

Calculate the expected portfolio return.
Calculate the beta of the portfolio.
Explain what happens to the portfolio risk if the returns of the two securities are:

Perfectly positively correlated.
Perfectly negatively correlated.

Reference no: EM13833690

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