Reference no: EM132930228

Problem 1: Bob has a 50,000 stock portfolio with a beta of 1.2, expected return of 10.8% and a standard deviation of 25%. Becky has a $50,000 portfolio but it has a beta of 0.8 and expected return of 9.2% and a standard deviation that is also 25%. The correlation coefficient ,r, between Bob's and Buckys portfolio's is zero. Bob and Becky marry and combine their portfolios which of the following best describes her combined $100,000 portfolios

A. The combined portfolios expected return will be less than the simple weighted average of the expected returns of the two individual portfolios 10.0%
B. And a portfolio standard deviation will be greater than the simple average of the two per folio Statter to be oceans 25%
C. In a portfolios expected return would be greater than a simple weighted average of the expected returns of the two individual per folio's 10.0%
D. The combined portfolios beta will be equal to a simple weighted average of the Betos of the two individual portfolios 1.0 it's expected return will be equal to a simple weighted average of the expected returns of the two individual portfolios 10.0%
E. Portfolios standard deviation will be equal to a simple average of the two per folio standard deviation's 25%