Question 1: A medium-sized finance company is considering an investment portfolio of 40% of stock A...

Question 1: A medium-sized finance company is considering an investment portfolio of 40% of stock A and remaining 60% in stock B over the next four years (2020-2023). Given the returns of two stocks A and B in the table below over the four-year period, calculate the following: (3.5 marks)

	Stock A	Stock B
2020	10%	9%
2021	12%	8%
2022	13%	10%
2023	15%	11%

Calculate the expected portfolio return, rp, for each of the four years.
Calculate the expected value of portfolio returns, rp, over the four-year period.
Calculate the standard deviation of expected portfolio returns over the four-year period.

Solutions

Expert Solution

Calculate the expected portfolio return, rp, for each of the four years.

2020 = 9.40%

2021 = 9.60%

2022 = 11.20%

2023 = 12.60%

Calculate the expected value of portfolio returns, rp, over the four-year period. = 10.70%

Calculate the standard deviation of expected portfolio returns over the four-year period. = 1.50%

Please upvote if satisfied

jeff jeffy answered 1 year ago

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