Estimate the average return of the new portfolio

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Reference no: EM132973596

Question: 'Investors are rational. When allocating their investments, they give equal consideration to the investments available locally as well as globally". Do you agree with this statement? Explain

-One of your friend plan to extend his current investment portfolio by investing in a share traded in Thailand stock market. The historical data indicate this Thailand investment offer a 17% annual average return with 14% standard deviation. Currently, your friend is holding an investment portfolio which worth AUD12.90 million. For the investment in Thailand, she/he expects to use AUD2.10 million which collected by selling one of her/his real estate property. His/her current investment portfolio offers a 8% rate of average annual return with an 10% standard deviation. Estimated correlation coefficient of the current investment portfolio with the targeted Thailand investment is -0.96 (Negative).

-You are required to estimate the average return of the new portfolio (which include investment in Thailand) and the standard deviation of the portfolio return ((1+2)

Reference no: EM132973596

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