An investor invests 40% of her wealth in a risky asset with an expected rate of...
An investor invests 40% of her wealth in a risky asset with an expected rate of return of 15% and a standard deviation of 20%. The rest of her wealth is invested in the risk-free asset, which yields 6%. What are the expected return and standard deviation of her portfolio?
Homework Answers
We see that
Expected returns=40%*15%+(1-40%)*6%=9.600%
Standard deviation=40%*20%=8.00%
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