Risky portfolio by investing half of her money in stocks

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1. Ashley wants to form a risky portfolio by investing half of her money in stocks and half in bonds. She puts half in a stock mutual fund that has an expected return of 19% and a standard deviation of 24%; and the rest in a corporate bond mutual fund that has an expected return of 14.5% and a standard deviation of 17.5%. The stock and bond funds have a correlation of 0.15. What is the standard deviation of Ashley's portfolio.

2. Ben wants to design a risky portfolio from two funds, Momentum Fund and Value Fund. Momentum Fund has an expected return of 43% and a standard deviation of return of 48%. Value Fund has an expected return of 24.5% and a standard deviation of return of 27.5%. What is expected return on John's portfolio if he puts 0.52 in Momentum Fund?

Reference no: EM131979563

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