The expected returns for the funds are 10 for the us and 8


A U.S. investor is considering a portfolio consisting of 60% invested in the U.S. equity index fund and 40% invested in the British equity index fund. The expected returns for the funds are 10% for the U.S. and 8% for the British, standard deviations of 20% for the U.S. and 18% for the British, and a correlation coefficient of 0.30 between the U.S. and British equity funds.

a) What is the expected return of the proposed portfolio?

b) What is standard deviation of the proposed portfolio?

 

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Finance Basics: The expected returns for the funds are 10 for the us and 8
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