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An investor invests 30% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are __________ and __________, respectively.

Respuesta :

saqib097

Answer:

His portfolio's expected return and standard deviation are 8.7% and 6% respectively.

Explanation:

His portfolio's expected return would be the sum of weighted-expected return of the risky asset and the T-bill.

Risky asset = 30% investment with expected return of 0.15

T-bill = 70% which pays 6%

The portfolio's expected return,

E(rP) = 0.3(15) + 0.7(6) = 8.7%

Standard deviation is the square root of the variance.

sP= [tex]0.3(0.04)^{1/2}[/tex] = 6%

busyfingers1193

Answer:

8.7%, 6%

Explanation:

E(rP) = 0.3(15%) + 0.7(6%) = 8.7%; sP= 0.3(0.04)1/2= 6%.

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