Use the following information to calculate the expected return and standard devi

Question

Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

3 Doors, Inc. Down Co.   Expected return, E(R) 16 % 14 %   Standard deviation, 46 48   Correlation .31         Expected return %   Standard deviation %

Explanation / Answer

ER(p) = 16%x0.60 + 14%x0.40

= 15.20%

S.D(p) = {(46% x0.60)2 + (48% x 0.40)2 + 2x46%x0.60x48%x0.40x0.31}1/2

= 38.20%

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