Katie is given the following information about the returns on two ...

[CORALGRILL2014]

Katie is given the following information about the returns on two stocks: Compute the expected value of the portfolio composed of 30 stock 1 and 70 stock 2.

Question 2

The probability of success on any trial of a binomial experiment is 20. Find the probability that the proportion of success in a sample of 400 is:
 a. less than 18.
  b. more than 18.
  c. between 18 and 22.

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Answer to Question 1

E(Rp) = w1E(R1) + w2E(R2) = (0.30)(0.10) + (0.70)(.15) = 0.135

Answer to Question 2

a. 0.1587
b. 0.8413
c. 0.6826