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Find the expected return on the portfolio

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Reference no: EM132419361

Problem: As the President of the Investment Club as King's, you have just acquired an investment of $10,000 to invest in the TSE on behalf of the club. You decide to invest in portfolio of 2 stocks - investing 30% in Stock 1 and 70% in Stock 2. These stocks have a correlation coefficient of -0.53. The expected returns from the stocks are 11% and 7% respectively. Their standard deviations are σ1 = 4%, and σ2= 10%.

Required:

Question 1: Find the expected return on the portfolio.

Question 2: Find the risk of the portfolio.

Reference no: EM132419361

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