Use the following information to calculate the expected return and standard devi
ID: 2726132 • Letter: U
Question
Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 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 60 percent invested in 3 Doors, Inc., and 40 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.)
3 Doors, Inc. Down Co. Expected return, E(R) 16 % 14 % Standard deviation, 46 48 Correlation .31 Expected return % Standard deviation %Explanation / Answer
ER(p) = 16%x0.60 + 14%x0.40
= 15.20%
S.D(p) = {(46% x0.60)2 + (48% x 0.40)2 + 2x46%x0.60x48%x0.40x0.31}1/2
= 38.20%