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What is the portfolio expected return

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The table below summarizes the expected returns and standard deviations of stock A and B. The correlation coefficient between the two stocks is -0.1. An investor considers an investment portfolio with $6000 invested in stock A and $4000 invested in stock B.

Stock

Expected Return

Standard Deviation

A

13%

27%

B

16%

30%

Answer the following questions 

  1. What is the portfolio's expected return? 
  2. What is the covariance between stock A and B? 
  3. What are the portfolio's variance and standard deviation?
  4. What is the portfolio's expected Sharpe ratio if the interest rate is 6%? 

Reference no: EM133072677

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