Compute the share of the stock

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Reference no: EM133082940

Suppose you wish to look into the investments on Stocks A and B. For each share of the stock, the return is given below:

 

Return ($) Per Share

Average

Standard Deviation 

Stock A

5

1.0

Stock B

7

1.2

The correlation between returns of Stocks A and B is 0.2.

(a) Which stock has a higher risk?  Explain your answer.

(b) Suppose your portfolio has 50 shares of stock A and 60 shares of stock B.  What is your expected return in the portfolio?

(c) Suppose your portfolio has 50 shares of stock A and 60 shares of stock B.  What is the standard deviation on the return in the portfolio?

Reference no: EM133082940

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