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How much mr ali should invest in stock a and stock b

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Reference no: EM132765636

Question - Mr. Ali want to construct a portfolio and financial analyst provide some information of first option. The first option information is given below.

If we assume that expected risk of portfolio is fixed i.e., 12%.

Expected Risk of Stock A is 17% and Expected Risk of Stock B is 9%.

Expected Average Return of Stock A is 22% and Expected Average Return of Stock B is 13%.

The Correlation Coefficient between Stock A and B is -0.09.

Requirement -

1. How much Mr. Ali should invest in Stock A and Stock B?

2. What will be the expected return of Portfolio?

Reference no: EM132765636

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