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Calculate the expected return for security separately

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Reference no: EM133111548

  1. Discuss whether diversification at company level has any value to a company's ordinary shareholders.
  2. You are considering investing in two securities X and Y had the following information;

security

Possible return (%)

Probability

x

30

25

20

50

30

10

0.3

0.4

0.3

0.2

0.6

0.2

y

Required:

  1. Calculate the expected return for each security separately and for a portfolio of 60% X and 40 % Y.
  2. Calculate the expected risk of each security separately and of the portfolio as defined above if the correlation coefficient of the two returns is +0.15.

Reference no: EM133111548

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