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What is the standard deviation of the rate of return

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Reference no: EM132634803

You hold a portfolio that yields an expected rate of return of 18% and standard deviation of 28%. The components of the portfolio include 25% of funds in Stock A, 32% of funds in Stock B and 43% of funds in Stock C. A T-bill money market fund yields a rate of 8%. Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%

a. What is the proportion y?

b. What are your client's investment proportions in your three stocks and the T-bill fund?

c. What is the standard deviation of the rate of return on your client's portfolio?

Reference no: EM132634803

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