IDNLearn.com provides a user-friendly platform for finding answers to your questions. Get the information you need from our community of experts who provide accurate and comprehensive answers to all your questions.
10.82 is your optimal allocation between risky asset p ( ) and risk-free asset (1- ).
Expected return & Return X Probability.
:. Expected return of fund "A" B #x05+ (-5X0·3) + 20x⋅ 2 => 6 25x.5+ 10x 3+ (-25x-2)510-s LA L
Calculation of standard deviation, and correlations
1X0.5 +121X0·3+ 196X-2 872
√210.25x0.540.25x0.3 +1260.25x0·2 18.90
Co-variance. = 14.5x0.5 +5.5x0·3+ (-497×0.2) -90.5
Co-relation=-90.5 -0.55
8.72×18.90
with the use of the given formula given. Calculation of weight: -
W₁ = (6-4.25) (18.90)² - [ 10.5-4.25x1-90·5)
(6-4.25) (18.90)²+ 10.5-4.25]($.72)²=-(6-4-25+1015-4:25] × (90·5)
625-1175 + 565.625
5) 1190.7425 = 0.65 1824.3575
625.1175+ 475.24+724
1-0.65 0.35 A
7.5757 • Expected return of portfolio = 6x0.65 +10.5x0.35
Standard deviation (r) of portfolio - 18-72x0.65) + (18 · 9X8:35) 72 (8-72X0·65) (8·4x0-35 x0.55
7
10.82.
A risky asset is an asset that involves some risk. Risky assets generally refer to assets with high price volatility, such as Examples: Stocks, Commodities, High Yield Bonds, Real Estate, and Currencies.
Learn more about the risky assets at
https://brainly.com/question/25821437
#SPJ4