Expected return.docx - i Expected return = Rp=w1R1...

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i) Expected return = R p =w 1 R 1 + w 2 R 2 (0.5×0.245) + (0.5×0.26) =0.2525 = 25.25% Standard deviation = 2 p =w2 1 2 1+ w2 2 2 2 + 2w1w2 1,2 1 2 = (0.5) 2 (0.0415) 2 + (0.5) 2 (0.0831) 2 + 2 (0.5) (0.5) (0.0415) (0.0831) (-0.2) = 0. 0018121 = 0.0018121 = 0.04256876789 = 4.26% ii) Expected return = R p =w 1 R 1 + w 2 R 2 (0.75×0.245) + (0.25×0.26)
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