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Author Question: Investment A has an expected return of 10 with a standard deviation of 3.5. Investment B has an ... (Read 120 times)

HudsonKB16

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on: Jun 24, 2018
Investment A has an expected return of 10 with a standard deviation of 3.5. Investment B has an expected return of 6 with a standard deviation of 1.2.
 
  If you invest equally in both investments, what is the expected return and standard deviation of your portfolio? What assumptions have you made?

Question 2

Develop a 90 confidence interval for the population slope if the following regression information are given: b1= 23.5, p-value = 0.01, and n = 25.
 
  A) 23.5  17.35
  B) 23.5  15.35
  C) 23.5  16.35
  D) 23.5  14.35


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SAUXC

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Reply #1 on: Jun 24, 2018
Answer to Question 1

E(A + B ) = 0.10 + 0.06 = 0.16
Assume the rates of return are independent, Var(A + B ) = Var(A ) + Var(B) = 13.69. Hence,  of (A + B) = 3.7

Answer to Question 2

D


HudsonKB16

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Reply #2 on: Jun 24, 2018
Thank you


SAUXC

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Reply #3 on: Jun 24, 2018
No problemo


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