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Expected values and standard deviation

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A portfolio is composed of 2 stocks, Apple and Windows. The proportion of each stock, their expected values and standard deviation are listed in this table. Please answer the following questions:

stock

apple

windows

proportion of portfolio

.6

.4

mean

.14

.05

standard deviation

.08

.01

(1) If an investor is most interested in maximizing his returns, which stock should he choose? Why? Please explain.

(2) If an investor is most interested in minimizing his risk, which stock should he choose? Why? Please explain.

(3) According to your knowledge of the modern portfolio theory, does the way to form this portfolio make sense to you?

Reference no: EM132274997

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