QUESTION 10 An investor has decided to form a portfolio by putting 3596 of his money into Google's stock and 65% into Apple's stock. The investor assumes that th expected returns will be 1896 on Google and 259% on Apple, and that the standard deviations will be 109% and 20%, respectively. What is the expected (mean) return on the portfolio? O E [Return on portfolio] = 0.2255 O E [Return on portfolio] = 0.2525 O E [Return on portfolio] = 0.2045 O E [Return on portfolio] = 0.2450
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
![QUESTION 10
An investor has decided to form a portfolio by putting 35% of his money into Google's stock and 65% into Apple's stock. The investor assumes that the
expected returns will be 1896 on Google and 25% on Apple, and that the standard deviations will be 10% and 20%, respectively. What is the expected
(mean) return on the portfolio?
O E [Return on portfolio] = 0.2255
O E [Return on portfolio] = 0.2525
O E [Return on portfolio] = 0.2045
O E [Return on portfolio] = 0.2450](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4eb88ca4-e2c7-4b4b-a7b7-13b8c44297a0%2Fa2e8f869-0c37-4469-9f4c-688bd585318d%2F6rfhq2_processed.jpeg&w=3840&q=75)
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