The investor is presented with the two following stocks: Expected Return Standard Deviation Stock A 10%...
The investor is presented with the two following stocks:
|
Expected Return |
Standard Deviation |
|
|
Stock A |
10% |
30% |
|
Stock B |
20% |
60% |
What is the expected return on the portfolio that invests 30% in stock A?
| A. |
15% |
|
| B. |
17% |
|
| C. |
27% |
|
| D. |
23% |
Homework Answers
Weight of Stock B=(100-30)=70%
Expected return=Respective return*Respective weight
=(0.3*10)+(0.7*20)
which is equal to
=17%
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