Ask Question
29 November, 12:07

You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. What is the expected value and standard deviation of the rate of return on his portfolio?

+4
Answers (1)
  1. 29 November, 12:10
    0
    expected return = (70% x 18%) + (30% x 8%) = 12.6% + 2.4% = 15%

    standard deviation of the rate of return = 70% x 28% = 19.6%

    Explanation:

    The expected return for this portfolio is the weighted average of the individual returns.

    The standard deviation is the weighted standard deviation of the riskiest investment only.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers