Calculating expected return and standard deviation
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Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected returns and standard deviation of a portfolio invested 30% in Stock A and 70% in Stock B?
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Solution describes the steps to calculate expected return and standard deviation of the given portfolio.
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Weight of stock A=wa=0.3
Weight of stock B=wb=0.7
Expected return from stock A=E(Ra)=12%
Standard deviation of stock A=sa=40%
Expected ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
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