Purchase Solution

Expected Returns and Standard Deviation

Not what you're looking for?

Ask Custom Question

Share A has an expected return of 15% and standard deviation of 14%. Share B has an expected return of 23% and a standard deviation of 18%. Correlation between Share A & B is 0.3

Share A has 30% invested and Share B has 70%.

(a) What is the expected return and the standard deviation of return on the portfolio?

(b) Recalculate the expected return and the standard deviation where the correlation between the returns is -0.4 and 1.0 respectively.

Purchase this Solution
Solution Summary

The solution explains how to calculate the expected returns and standard deviation

Purchase this Solution
Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Stocks and Portfolio

    Returns Deviation Good 70% 40% 7.21% Normal 20% 25% 0.58% Poor 10% 7% 0.00% Expected return 33.7% 7.80% Standard deviation 27.9% What is the expected return for the portfolio if you invest 40% in A and 60% in B?

  • Expected return and standard deviation

    141981 Calculate the expected returns and standard deviation Please explain how to calculate the expected return and standard deviation of returns when your only given possible outcomes and probability returns.

  • Decision making using expected value and std deviation

    Using expected value and standard deviation as a basis for comparison, discuss which of the two investments should be selected.

  • Expected return and Standard Deviation of a portfolio

    The solution calculates the Expected return and Standard Deviation of a portfolio of 2 stocks given the expected returns and standard deviation of returns of the two stock, the coefficient of correlation of returns of the two stocks and the proportion

  • Expected Return and Standard Deviation: Stocks

    73375 Suppose the expected return and standard deviation Suppose the expected returns and standard deviations of stocks A and B are E(R^A)=0.15, E(r^B)=0.25, s^a=0.1, and s^b=0.2, respectively.

  • Expected return and standard deviation

    273326 Expected return and standard deviation.. A3. (Expected return and standard deviation) An investment has four possible returns, each with its own probability given here. a. What is the expected return? b.

  • Expected Returns and Standard Deviation of Gamma Industries

    The expected return on Gamma is 12% and the expected return on Epsilon is 16%. The standard deviation of returns for Gamma is 8% and for Epsilon is 12%.

  • Portfolio Return and Standard Deviation

    Calculate the expected return and standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation between the returns on A and B is 0.6. b.

  • Expected Return and Standard Deviation

    0.005187 Standard Deviation = Square root ( Variance) Standard Deviation = Square root (0.005187) Standard Deviation = 7.2% The solution explains the calculation of expected return and standard deviation of a stock.

View More Related Solutions