The investor invested in stocks and bonds to form a minimum variance portfolio. The return and standard deviation is as follows: Expected return Standard deviation Stock 14% 40% Bond 8% 30% The correlation between returns of the stock and bond is 0.06. Calculate the minimum variance portfolio's expected return. (A) The expected return of the minimum variance portfolio is 11.00%. (B) The expected return of the minimum variance portfolio is 14.28%. (C) The expected return of the minimum variance portfolio is 8.36%. (D) The expected return of the minimum variance portfolio is 10.11%.
The investor invested in stocks and bonds to form a minimum variance portfolio. The return and standard deviation is as follows: Expected return Standard deviation Stock 14% 40% Bond 8% 30% The correlation between returns of the stock and bond is 0.06. Calculate the minimum variance portfolio's expected return. (A) The expected return of the minimum variance portfolio is 11.00%. (B) The expected return of the minimum variance portfolio is 14.28%. (C) The expected return of the minimum variance portfolio is 8.36%. (D) The expected return of the minimum variance portfolio is 10.11%.
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Transcribed Image Text:The investor invested in stocks and bonds to form a minimum variance portfolio.
The return and standard deviation is as follows:
Expected return
Standard deviation
Stock
14%
40%
Bond
8%
30%
The correlation between returns of the stock and bond is 0.06.
Calculate the minimum variance portfolio's expected return.
(A) The expected return of the minimum variance portfolio is 11.00%.
(B) The expected return of the minimum variance portfolio is 14.28%.
(C) The expected return of the minimum variance portfolio is 8.36%.
(D) The expected return of the minimum variance portfolio is 10.11%.
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