What is the standard deviation of the portfolio

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Question 1 - Shakib Al Hasan is now planning to invest in a leveraged portfolio after his brief success in the stock market. He invests 100,000 Taka of his own money and 50,000 Taka of borrowed money in an index fund. The rate of interest is 10% on the borrowed money. The index fund has a return of 16% and a standard deviation of 30%. Calculate Shakib's expected risk and return if he opts for the above portfolio selection?

Question 2 - You are creating a portfolio consisting of 2 stocks only, Dulamia Cotton and GrameenPhone. You are investing $2,000 in Dulamia Cotton and $3,000 in GrameenPhone. Given that the expected return of Dulamia Cotton is 9% and the expected return from GrameenPhone 8% respectively.

a) What is the expected return of your portfolio? Given also that the expected standard deviations of Dulamia Cotton and GrameenPhone are 13.15% and 11.65% respectively.

b) What is the standard deviation of the portfolio, given that the correlation coefficient between the two stocks is 0.75.?

Reference no: EM133048382

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