Expected return and standard deviation of portfolio

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Stock X and Stock Z both have an expected return of 10%. The standard deviation of the expected return is 8% for Stock X, and 12% for Stock Z. Assume that these are the only two stocks available in a hypothetical world. A. Assume that the correlation between the returns of the two stocks is +1. • What is the expected return and standard deviation of a portfolio containing 50% X and 50% Z • What is the optimal amount of Stock Z for an investor to hold in a portfolio (if the correlation is +1)?

Reference no: EM131079425

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