The expected return of a portfolio of risky securities


1. Suppose Wesley? Publishing's stock has a volatility of 60%?, while Addison? Printing's stock has a volatility of 20%. If the correlation between these stocks is 75%?, what is the volatility of the following portfolios of Addison and? Wesley:

a. 100 Addison

b. 75% Addison and 25% Wesley

c. 50% Addison and 50% Wesley

2. The expected return of a portfolio of risky securities is…

A. the weighted sum of the securities' returns

B. the sum of the securities' returns

C. the weighted sum of the securities' variances and co-variances

D. both the weighted sum of the securities' returns, variances and co-variances

E. the weighted sum of the securities' co-variances

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Financial Management: The expected return of a portfolio of risky securities
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