What is the purpose of diversifying a portfolio

Reference no: EM131797754

Question: Given the information below, please answer the following questions: (Total points-21) State of Probability of Returns if State Occurs Economy Boom Stock Q Stock R 1696 State of Economy 10% 90% 14% 8% Normal 1196

A. What is the expected return of Stock Q?

B. What is the standard deviation of Stock R?

C. What is the expected return of the portfolio if you invest $1,560 in stock Q and $1,440 in stock R?

D. What is the standard deviation of the portfolio based on investing $1,560 in stock Q and $1,440 in stock R?

E. In 15 words or less, what is the purpose of diversifying a portfolio?

Reference no: EM131797754

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