Expected return and volatility of equally weighted portfolio

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Reference no: EM131521214

Suppose? Target's stock has an expected return of 20 % and a volatility of 37 %, Hershey's stock has an expected return of 12 % and a volatility of 25 %, and these two stocks are uncorrelated.

a. What is the expected return and volatility of an equally weighted portfolio of the two? stocks? Consider a new stock with an expected return of 16.0 % and a volatility of 31 %. Suppose this new stock is uncorrelated with? Target's and? Hershey's stock.

The expected return is _%?

b. Is holding this stock alone attractive compared to holding the portfolio in (a?)?

c. Can you improve upon your portfolio in (a?) by adding this new stock to your? portfolio? Explain.

Reference no: EM131521214

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