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Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with duke...

Consider the following expected returns, volatilities, and correlations:

Stock Expected Return Standard Deviation Correlation with duke energy Correlation With Microsoft Correlation With Walmart
Duke Energy 15% 5% 1 -1 0
Microsoft 44% 24% -1 1 0.7
Walmart 23% 14% 0 0.7 1

a. Consider a portfolio consisting of only Duke Energy and Microsoft. What is the percentage of your investment (portfolio weight) that you would place in Duke Energy stock to achieve a risk-free investment? b. What is the expected return of a portfolio that is equally invested in Duke Energy and Microsoft? c. What is the volatility of a portfolio that is equally invested in Duke Energy and Microsoft? d. What is the expected return of a portfolio that consists of a long position of $11,000 in WalMart and a short position of $3,000 in Microsoft? e. What is the volatility of a portfolio that consists of a long position of $11,000 in Wal-Mart and a short position of $3,000 in Microsoft?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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