5.2.13 Question Help Suppose that you want to create a portfolio that consists o

Question

5.2.13 Question Help Suppose that you want to create a portfolio that consists of stock X and stock Y.For a $1,000 investment, the expected return for stock X is $77 and the expected return for stock Y is $106. The variance for stock X is 3,525 and the variance for stock Y is 6,375. The covariance of stock X and stock Y is 5,297. Complete parts (a) through (d). a. Compute the portfolio expected return and portfolio risk if the percentage invested in stock X is 10%, The portfolio expected return is $ (Type an integer or a decimal.)

Explanation / Answer

Portfolio expected return = 0.10*77 + 0.90*106 = 103.1

Hence,

The portfolio expected return is $ 103.1

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