Homework Answers
Answer: Expected return on Fund is calculated as Risk Free rate + Risk free premium = 6% + 10% =16%
Expected return of a portfolio = Summation of ( Weight of investment * Return rate )
Expected return of Portfolio = 60,000/(60000+40000) * 16% + 40,000/(60000+40000) * 6%
Expected return of Portfolio = 0.6*16% + 0.4*6% = 12%
Standard Deviation of the Clients Portfolio : % of allocation in equity fund of market * Standard deviation of Equity
Standard Deviation of the Clients Portfolio : 0.6 * 14% = 8.4%
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Course：Porfolio fund and management
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