Solution-Covariance of stock and bond

Covariance of stock and bond

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Reference no: EM133001338

Please answer an investor constructs portfolio with 2 risky assets. Bonds and stock. She invests 40% of the portfolio in stock and the 60% into bond. The expected return of the bond is 10% with standard deviation at 15%. The expected return of the stock is 25% with standard deviation at 20%. The correlation between stock and bond is 0.8. The risk free rate is 5%.

What's the covariance of stock and bond?

Reference no: EM133001338

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Covariance of stock and bond

Reference no: EM133001338

Reference no: EM133001338

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