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Calculate the expected returns and standard deviations

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Question - A mutual fund manager constructs 4 portfolios using Oracle and Intel stocks:

Portfolio A: $ 1,100 in Oracle; $2,900 in Intel

Portfolio B: $ 2,000 in Oracle; $2,000 in Intel

Portfolio C: $ 2,500 in Oracle; $1,500 in Intel

Portfolio D: $ 3,000 in Oracle; $1,000 in Intel

The correlation between Oracle's and Intel's returns is 0.705. The expected returns are 16% and 10% for Oracle and Intel, respectively. The standard deviation is 45.00% for Oracle stock and 30.00% for Intel stock.

Calculate the expected returns and standard deviations for the 4 portfolios. Rank the 4 portfolios and provide explanation for your ranking?

Reference no: EM132953437

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