Calculate the standard deviation of returns for portfolio

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Assume a two-stock portfolio with $70,000 invested in Du Telecom Company and $30,000 invested in Etisalat Company. Estimated Return Economy Probability Du Telecom (ri) Etisalat (ri) Portfolio(ri) Strong 0.40 44% 20% 35 % Normal 0.40 14% 30% 25 % Weak 0.20 -16% -20% -9 % Total 1.00 1. Calculate the expected rate of return for Etisalat stock (RE). 2. Assume the expected rate of return for Du Telecom (RD) is 20%; calculate the expected rate of return for the portfolio (sp). 3. Calculate the standard deviation (sE) for Etisalat stock. 4. Calculate the standard deviation (sp) of returns for the portfolio. 5. Assumes the standard deviation (sD) for Du Telecom is 22.45%, is it less risky to invest in the previous portfolio rather than investing in each stock separately? Explain

Reference no: EM132046979

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