Expected rate of return and variance of returns

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A portfolio has been constructed by combining 2 assets in equal proportions.

The Expected Returns in different economic scenarios are given in the table below

Economic scenario Probability Assets A return

Boom 0.20 22%

Normal 0.55 14%

Recession 0.25 7%

Calculate:

i) Expected Rate of Return and Variance of returns for Asset A

ii) Expected Rate of Return and Variance of returns for Asset B

iii) Coefficient of Correlation between Asset A and B

iv) Portfolio Return and Portfolio Risk

Reference no: EM133075811

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