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What is expected return on johns portfolio

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Ben wants to design a risky portfolio from two funds, Momentum Fund and Value Fund. Momentum Fund has an expected return of 35% and a standard deviation of return of 40%.

Value Fund has an expected return of 20.5% and a standard deviation of return of 23.5%. What is expected return on John's portfolio if he puts 0.6 in Momentum Fund?

a) 26.3%

b) 29.2%

You construct a portfolio from two stocks, Alpha and Beta, by investing 0.44 of the portfolio in Alpha and the rest in Beta.

Stock Alpha has a standard deviation of return of 39%, while stock Beta has a standard deviation of return of 27.5%. The correlation coefficient between the returns on the two stocks is 0.58.

What is the standard deviation of the return on this portfolio?

a) 23.06%

b) 28.95%

Reference no: EM132126023

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