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An investor can design a risky portfolio based on two stocks, S and B. Stock S has an expected return of 18% and a standard deviation of returm of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5 %. The correlation coefficient between the returns of S and B is 0.50. The risk-free rate of return is 10%. The standard deviation of return on the optimal risky portfolio is (E(r)-r,)o-(E(r,)-r,)P0 (E(r,) -,)০; + (F(;,) -r,)০;-[EC,) -r, + E(G,) - 7,\p.an0, Wa %D 7% 0% 20% O 5%

An investor can design a risky portfolio based on two stocks, S and B. Stock S has an expected return of 18% and a standard deviation of returm of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5 %. The correlation coefficient between the returns of S and B is 0.50. The risk-free rate of return is 10%. The standard deviation of return on the optimal risky portfolio is (E(r)-r,)o-(E(r,)-r,)P0 (E(r,) -,)০; + (F(;,) -r,)০;-[EC,) -r, + E(G,) - 7,\p.an0, Wa %D 7% 0% 20% O 5%

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.5: Comparing Sets Of Data
Problem 14PPS
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An investor can design a risky portfolio based on two stocks, S and B. Stock S has an expected retun of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5 %. The correlation coefficient between the returms of S and B is 0.50. The risk-free rate of retun is 10%. The standard deviation of return on the optimal risky portfolio is (E(r,)-r,)o-(E(r,)-r,)P0 (E(r,)-r)o +(E(r,)-r,)o-[Er,)-r,+E(r)-r,\Pao. WB 7% O 0% 20% 5%
Transcribed Image Text:An investor can design a risky portfolio based on two stocks, S and B. Stock S has an expected retun of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5 %. The correlation coefficient between the returms of S and B is 0.50. The risk-free rate of retun is 10%. The standard deviation of return on the optimal risky portfolio is (E(r,)-r,)o-(E(r,)-r,)P0 (E(r,)-r)o +(E(r,)-r,)o-[Er,)-r,+E(r)-r,\Pao. WB 7% O 0% 20% 5%
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