Suppose Johnson? & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown? here,with a correlation of 23%.
Calculate (a?) the expected return and (b?) the volatility? (standard deviation) of a portfolio that consists of a long position of $8,000 in Johnson? & Johnson and a short position of $3,000 in Walgreens.
Johnson & Johnson Expected Return 6.9% Standard Deviation 17.8%
Walgreens Boots Alliance Expected Return 9.6% Standard Deviation 20.7%
a. Calculate the expected return.
The expected return is _________(Answer)
?(Round to one decimal? place.)
b. Calculate the volatility? (standard deviation).
The volatility is __________(Answer)
? (Round to one decimal? place.)