Expected Return of Asset 1 = 15.00% Standard Deviation of Asset 1 = 17.00% Expected Return...

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Expected Return of Asset 1 = 15.00% Standard Deviation of Asset 1 = 17.00% Expected Return...

Expected Return of Asset 1 =	15.00%
Standard Deviation of Asset 1 =	17.00%
Expected Return of Asset 2 =	9.75%
Standard Deviation of Asset 2 =	8.88%
The correlation coefficient_1,2 =	0.45

A portfolio invested 50% in Asset 1 and 50% in Asset 2 is formed. Compute the portfolio's expected return.

Select one:

a. 11.22%

b. 4.71%

c. 12.38%

d. 9.09%

e. 27.20%

business finance

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Answer 1

Answer #1

Weight of Asset 1 = 0.5

Weight of Asset 2 = 0.5

return of Portfolio = Weight of Asset 1*return of Asset 1+Weight of Asset 2*return of Asset 2

return of Portfolio = 15*0.5+9.75*0.5

return of Portfolio = 12.375

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Answer 2

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