You estimate that the expected return of NFLX stock is 8%, and standard deviation of the stock is 20%. The expected return of DIS stock is 4%, and standard deviation of the stock is 7%. If the correlation between NFLX returns and DIS returns is 40%, what is the expected return and standard deviation of a portfolio with $7,000 invested in NFLX and $3,000 invested in DIS?

You estimate that the expected return of NFLX stock is 8%, and standard deviation of the stock is 20%. The expected return of DIS stock is 4%, and standard deviation of the stock is 7%. If the correlation between NFLX returns and DIS returns is 40%, what is the expected return and standard deviation of a portfolio with $7,000 invested in NFLX and $3,000 invested in DIS?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 12P

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