Problem:
Two securities have the following expected returns: X=15% AND Y=22%
Required:
Question 1: Calculate expeted return for a portfolio consisting of securities X and Y if the portfolio is weighted 40% X and 60% Y
Question 2: Assume the standard deviation for the security X is 12% and for security Y is 18%.The correlation coeeficient for XY=+.7. Calculate standard deviation for the portfolio containing securities X and Y
Note: Provide support for your rationale.