Johnrsquos portfolio consists of 1000 in xyz stock and 4000, Financial Management

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Johnrsquos portfolio consists of 1000 in xyz stock and 4000

John’s portfolio consists of $1000 in XYZ stock and $4000 in ABC. Historically XYZ has had an average return of 16% annually with a standard deviation of 30%. Historically ABC has an average return of 24% annually with a standard deviation of 40%. The correlation between the 2 stocks has been 0.4.

a) What is the expected return (based on historical averages) of John’s portfolio

b) What is the standard deviation of John’s portfolio?

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Financial Management: Johnrsquos portfolio consists of 1000 in xyz stock and 4000

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Financial Management: Johnrsquos portfolio consists of 1000 in xyz stock and 4000

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