Use the following information to calculate the expected return and standard devi
ID: 2725099 • Letter: U
Question
Use the following information to calculate the expected return and standard deviation of a portfolio that is 70 percent invested in 3 Doors, Inc., and 30 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Use the following information to calculate the expected return and standard deviation of a portfolio that is 70 percent invested in 3 Doors, Inc., and 30 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
Weights Expected Return Weights X Expected Return 3 Doors, Inc 70.00% 12.00% 8.40% Down Co. 30.00% 10.00% 3.00% Expected Return of Portfolio 11.40% Standard Deviation of Portfolio =sqrt( w2A*2(RA) + w2B*2(RB) + 2*(wA)*(wB)*Cov(RA, RB)) Standard Deviation of Portfolio =sqrt(( .70^2 * .32^2)+(.30^2 * .34^2)+2*.70*.30*.17) 36.33%