The analysis of outcomes for sales and the associated rate of return on common stocks for companies Smith and Harris are shown below. You intend to form a portfolio by allocating $4550 of your total wealth of $8000 in Company Smith, and the remainder in Company Harris. The correlation coefficient between the two companies is -.2365. Show all work to receive full credit. Declining flat rising Probability 42% 26% ? % return Smith -0.4% 10.8% 21.7% % return Harris 5.2% 18.3% 23.5% What is the expected return and standard deviation for common stocks in each company? (1.5 pts each) What is the portfolio return (2pts) and standard deviation (4pts) for this two-stock portfolio? Explain in words how and why portfolio variance is different than the sum of the individual standard deviations of the stocks? (3pts)
Author: Anonymous
Which of the following coagulation factors would degrade mos…
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