Aisyah is a new investor; she approached RHB Securities and the firm has provided her with the following information. Expected return (%) Probability (%) Stock X Stock Y 20 13 15 30 14 13 50 15 12 Using these stocks, she has identified two investment portfolio alternatives: Alternative 1 50% Stock X, 50% Stock Y Alternative 2 60% Stock X, 40% Stock Y
Aisyah is a new investor; she approached RHB Securities and the firm has provided her with the following information. Expected return (%) Probability (%) Stock X Stock Y 20 13 15 30 14 13 50 15 12 Using these stocks, she has identified two investment portfolio alternatives: Alternative 1 50% Stock X, 50% Stock Y Alternative 2 60% Stock X, 40% Stock Y
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 15MC
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b. Calculate the covariance for the above stock.
c) Does the combination of the above stock can be considered as an optimum diversification?
Justify your answer.
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