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Question: You are considering two assets with the following characteristics:

E(R1) = 0.15 E(r1) = 0.10 w1 = .50

E(R2) = 0.20 E(r2) = 0.20 w2= .50

Where E( R) is expected return and E(r) is expected standard Deviation. W is asset weight.

Calculate the mean and standard deviation of the portfolio if the correlation r1,2 = 0.40, and -0.60 respectively.

Plot the two portfolios on a risk-return graph and explain the differences.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92798779

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