Explore BrainMass

Explore BrainMass

    Calculating Expected Return & Standard Deviation

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Suppose a risk-free asset has a 5 percent return and a second asset has an expected return of 13 percent with a standard deviation of 23 percent. Calculate the expected portfolio return and standard deviation of a portfolio consisting of 10 percent of the risk-free asset and 90 percent of the second asset.

    © BrainMass Inc. brainmass.com March 4, 2021, 10:46 pm ad1c9bdddf
    https://brainmass.com/economics/risk-analysis/calculating-expected-return-standard-deviation-361205

    Solution Preview

    Weight of Risk free asset, A=wa=10%=0.10
    Weight of Second Asset B=wb=90%=0.90
    Expected return from asset A=E(Ra)=5%
    Standard deviation of stock A=sa=0% (As risk ...

    Solution Summary

    The solution describes the steps to calculate expected return and standard deviation of a portfolio consisting of a risk free asset and a asset with risk element.

    $2.49

    ADVERTISEMENT