Consider a portfolio comprised of Asset P and Asset Q. The expected return on Asset P is 10% and the standard deviation is 6%. The expected return on Asset Q is 12% and the standard deviation is 8%.
The correlation between the returns on these two assets is 0.500. Complete the following table.
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Proportion
|
Proportion
|
|
Covariance
|
|
|
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of Portfolio
|
of Portfolio
|
|
Between
|
|
Portfolio
|
|
Invested in
|
Invested in
|
Portfolio
|
Returns on
|
Portfolio
|
Standard
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|
Asset P
|
Asset Q
|
Return
|
Assets P and Q
|
Variance
|
Deviation
|
|
100%
|
0%
|
______
|
____________
|
_______
|
_______
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|
0%
|
100%
|
______
|
____________
|
_______
|
_______
|
|
50%
|
50%
|
______
|
____________
|
_______
|
_______
|
|
25%
|
75%
|
______
|
____________
|
_______
|
_______
|
|
75%
|
25%
|
______
|
____________
|
_______
|
_______
|