An analysis of the stock market produces the following information about the returns of two stocks.
Stock 1 Stock 2
Expected Returns 16% 18%
Standard Deviations 20 30
Assume that the returns are positively correlated with = 0.90.
Find the mean and standard deviation of the return on a portfolio consisting of an equal investment in each of the two stocks.
Proportion of stock 1=X1=0.5
Proportion of stock ...
Solutions describes the steps in finding mean and standard deviation of mixed portfolio. Expected Return and standard deviation of Individual stocks are given.