Christy is considering investing in the common stock of One Liberty and Heico.The following data are available for these two securities:
$$\begin{array} { l c c }
\text { Fanected return } & \frac { \text { One liberty } } { 12 } & \frac { \text { Helca } } { .16 } \
\text { Standard Aeriation of return } & 08 & 20
\end{array}$$
If she invests 30% of her funds in Heico and 70% in One Liberty, and if the correlation of returns between these securities is +0.65, what is the portfolio's expected return and standard deviation?
A)14% and 15.67%
B)14.8% and 9.44%
C)13.2% and 10.54%
D)13.1% and 9.67%

Question

Christy is considering investing in the common stock of One Liberty and Heico.The following data are available for these two securities:
$$\begin{array} { l c c } 
\text { Fanected return } & \frac { \text { One liberty } } { 12 } & \frac { \text { Helca } } { .16 } \
\text { Standard Aeriation of return } & 08 & 20
\end{array}$$
If she invests 30% of her funds in Heico and 70% in One Liberty, and if the correlation of returns between these securities is +0.65, what is the portfolio's expected return and standard deviation?
A)14% and 15.67%
B)14.8% and 9.44%
C)13.2% and 10.54%
D)13.1% and 9.67%

Quizplus · Accepted Answer

The Answer of Christy is considering investing in the common stock of One Liberty and Heico.The following data are available for these two securities:
$$\begin{array} { l c c } 
\text { Fanected return } & \frac { \text { One liberty } } { 12 } & \frac { \text { Helca } } { .16 } \
\text { Standard Aeriation of return } & 08 & 20
\end{array}$$
If she invests 30% of her funds in Heico and 70% in One Liberty, and if the correlation of returns between these securities is +0.65, what is the portfolio's expected return and standard deviation?
A)14% and 15.67%
B)14.8% and 9.44%
C)13.2% and 10.54%
D)13.1% and 9.67%

Christy Is Considering Investing in the Common Stock of One