What will be the portfolio expected rate of return

Reference no: EM13295668

Suppose SSI forms a two-asset portfolio by investing in both Projects A and B.

a. To begin, assume that required investment is the same for both projects-say, $5 million each.

1. What will be the portfolio's expected rate of return, standard deviation, and coefficient variation?
2. How do these values compare with the corresponding values for the individual projects?
3. What characteristics of the two return distributions makes risk reduction possible?

b- What do you think will happen to the portfolio's expected rate of return and standard deviation if the portfolio contained 75 percent of Project B?

Reference no: EM13295668

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