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    Expected return of the portfolio

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    You are building a two stock portfolio with securities ST and XY. Given the following information:

    - Standard deviation for stock ST = 15%
    - Standard deviation for stock XY = 25%
    - Expected return for stock ST = 18%
    - Expected return for stock XY = 24%
    - Correlation coefficient between ST and XY = 0.40
    - 60% of the Portfolio is invested in ST, the other 40% in XY

    What is the covariance between Securities ST and XY and the expected return for this portfolio?

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    Solution Summary

    Expected return of the portfolio is assessed.