question archive Ali is considering investing in a security A that has the following distribution of possible one-year returns: Probability Returns 0
Ali is considering investing in a security A that has the following distribution of possible one-year returns: Probability Returns 0
Subject:FinancePrice: Bought3
Ali is considering investing in a security A that has the following distribution of possible one-year returns:
Probability Returns
0.10 -0.10
0.20 0
0.25 0.10
0.30 0.4
0.15 0.45
a. Find expected return of the investment
b. Find standard deviation of the investment
c. If Ali invests half his money in Security A with above distribution and half in Stock B (Security B has expected return of 10%). Calculate portfolio return.
d. If Ali invests half his money in Security A with above distribution and half in Stock B (Security B has risk of 8%) and both have 0.15 correlation coefficient. Calculate portfolio risk.
