Recall the definition of the correlation coefficient of two random variables, defined as AB PAB The correlation PAB between assets A and B is 0.25, and other data are given in the table below. TWO CORRELATED CASES Asset σ A 10.0% 15% B 18.0% 30% Suppose you construct a "50-50" portfolio, consisting of 0.50 units of asset A and 0.50 units of asset B. What is this portfolio's expected return? Please express your answer in decimal form (not percentage) and round your numerical answer to two decimal places.

Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section: Chapter Questions
Problem 8CR
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Recall the definition of the correlation coefficient of two random variables, defined as
O AB
PAB =
The correlation PAB between assets A and B is 0.25, and other data are given in the table below.
TWO CORRELATED CASES
Asset
A
10.0%
15%
В
18.0%
30%
Suppose you construct a "50-50" portfolio, consisting of 0.50 units of asset A and 0.50 units of
asset B. What is this portfolio's expected return? Please express your answer in decimal form (not
percentage) and round your numerical answer to two decimal places.
Transcribed Image Text:Recall the definition of the correlation coefficient of two random variables, defined as O AB PAB = The correlation PAB between assets A and B is 0.25, and other data are given in the table below. TWO CORRELATED CASES Asset A 10.0% 15% В 18.0% 30% Suppose you construct a "50-50" portfolio, consisting of 0.50 units of asset A and 0.50 units of asset B. What is this portfolio's expected return? Please express your answer in decimal form (not percentage) and round your numerical answer to two decimal places.
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