Question

You have $410,000 invested in a well-diversified measures in the following table: portfolio. You inherit a house that is presently worth $160.000. Consider the summary Expected Return Standard Devia steent Old portfolio House 6 13% 11จ 198 The correlation coefficient between your portfolio and the house is o.5. a. What is the expected return and the standard deviation for your portfolio compi round intermediate calculations. Round your final answers to 2 decimal places) sing your old portfolio and the house? (Do not Expected return Standard deviation 11.5 b. Suppose you decide to sell the house and use the proceeds of $160,000 to buy risk-free T-bills that promise a 8% rate of r Calculate the expected return and the standard deviation for the resulting portfolio. [Hint. Note that the correlation coefficient between any asset and the risk-free T-bills is zero] (Do not round intermediate calculations. Round your final answers to 2 decimal places.) eturn. Expected return Standard deviation

Answer 1