Calculate the expected return of the two-security portfolio

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Reference no: EM131825647

Assume the following statistic for Stock A and Stock B:

Stock A = Expected Return = .15 Standard Deviation = .186 Weight = 60%

Stock B = Expected Return = .21 Standard Deviation = .280 Weight = 40%

Correlation Coeeficiant - +1; -1: +0.2

1. Calculate the expected return of the two-security portfolio?

2. Calculate the variance (and standard deviation) of the two-security portfolio based on each of the three (3) correlation coefficiants?

3. Discuss how adjusting the correlation coefficiant impacts the variance of the portfolio.

Reference no: EM131825647

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