What is the expected return on this investment

Reference no: EM131477155

Question: The correlations between the returns of three stocks A, B, and C are given in the following table:

The expected rates of return on A, B, and C are 16%, 12%, and 15%, respectively. The corresponding standard deviations of the returns are 25%, 22%, and 25%.

a. What is the standard deviation of a portfolio invested 25% in stock A, 25% in stock B, and 50% in stock C? 20.

b. You plan to invest 50% of your money in the portfolio constructed in part a of this question and 50% in the risk-free asset. The risk-free interest rate is 5%. What is the expected return on this investment? What is the standard deviation of the return on this investment?

Reference no: EM131477155

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