Stocks L and M have yielded the following returns for the past two years.
Years Return %
L M
1995 12 14
1996 18 12
(i) What is the expected return on portfolio made up of 60 percent of L and 40 percent of M? Find out the standard deviation of each stock.
(ii) What is the covariance and co-efficient of correlation between stock L and M?
(iii) What is the portfolio risk of a portfolio made up of 60 percent of land 40 percent