Two manufacturers of high quality

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Fred Inc. and Ginger Corp. are two manufacturers of high quality toys in the US. Fred Stock Price $40 Standard Deviation Returns 45% Beta 1 D/E (market ratios) 0.3 M/B 2 and Ginger Stock Price $30 Standard Deviation Returns 35% Beta 1.3 D/E (market ratios) 0.9 M/B 2.1 Market expected return 10% Risk Free Rate 4% Correlation of Ginger and Fred’s returns 0 19. A portfolio consisting of 60% Fred and 40% Ginger will have the following standard deviation (pick closest answer) a. 41.00% b. 40.00% c. 34.56% d. 30.41% e. 9.25%

Reference no: EM13945190

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