Show that the (percent) return of the portfolio satisfies Tp = WATA + WBTB, i.e. the portfolio return is equal to the weighted average of the returns of its composite assets. Let us now calculate the expected return e, of the portfolio ep E(rp) = E(wara + WB*B) = WACA + WB€B and its variance o = D(rp) = D(WATA+ WBTB) = wo%+ whoB + 2p WAWB TAOA- %3D

Show that the (percent) return of the portfolio satisfies Tp = WATA + WBTB, i.e. the portfolio return is equal to the weighted average of the returns of its composite assets. Let us now calculate the expected return e, of the portfolio ep E(rp) = E(wara + WB*B) = WACA + WB€B and its variance o = D(rp) = D(WATA+ WBTB) = wo%+ whoB + 2p WAWB TAOA- %3D

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 6P

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