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An investor is evaluating a two-asset portfolio of the following securities: Stock Expected Return Expected Risk (?) Correlation (?) Google (U.S.) 18.60% 22.80% .60 Vodafone (U.K.) 16.00% 24.00%

a. If the two securities have a correlation of .60 what is the expected risk and return for a portfolio that is equally weighted?

b. If the two securities have a correlation of .60 what is the expected risk and return for a portfolio that is 70% Google and 30% Vodafone?

c. Which of the portfolios is preferable? On what basis?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92881266

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