13 years ago 13 years ago

Risk and Return Illustration 17

by Score Tutorial 13 years ago13 years ago

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You have decided to invest 40% of your wealth in McDonalds which has an excepted return of 15% and a standard deviation of 15%, and 60% of your wealth in GE which has an excepted return of 9% and a standard deviation of 14%.

a) What is the excepted return of your portfolio?

b) If the correlation between McDonalds and GM is 0.5, what is the standard deviation of your portfolio?

c) If you wanted an excepted return of 13%, what percentage should you invest in McDonalds?

Based on your percentage in part C, what would the standard deviation of this portfolio be?

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Risk and Return Illustration 17

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