Compute the expected value and standard deviation

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Reference no: EM1349142

An investment has the following range of outcomes and probabilities:

Outcomes Probability of Outcomes
6% 0.20
9% 0.60
12% 0.20

Calculate the expected value and the standard deviation (round to two places after the decimal point where necessary).

5. If the two investments above were perfectly positively correlated (rij= +1), what would be the portfolio standard deviation?

11. If another security had a lower beta than indicated in problem 10, would Ki be lower or higher? What is the logic behind your answer in terms of risk?

Reference no: EM1349142

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