You currently Own a portfolio of two stocks. JH Chemical has an expected return of 11%...

You currently Own a portfolio of two stocks. JH Chemical has an expected return of 11% with a standard deviation of 15% while AAC Agriculture has an expected return of 15% with a standard deviation of 20%. The correlation coefficient between these two stocks is 0.30.

A. If you invest $14,000 in JH and $6,000 in AAC, what is the expected return and standard deviation of the portfolio? Was risk reduced relative to the individual risk of each security? Why?

B. What are the weights of each stock for the minimum variance portfolio?

Please show all work and formulas.

Expert Solution

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

jeff jeffy answered 1 year ago

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You currently Own a portfolio of two stocks. JH Chemical has an expected return of 11%...

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