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 October 10, 2019, 2:03 am ad1c9bdddf
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 ...
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.