Consider a portfolio consisting of the following three stocks Portfolio Weight Volatility Correlation with Market Portfolio HEC Corp 0.25 12% 0.4 Green Midget 0.35 25% 0.6 Alive and Well 0.4 13% 0.5 The volatility of the market portfolio is 10% and it has an expected return of 8%. The risk-free rate is 3%. The expected return of the portfolio is closest to: 7.53% 10.50 6.25% 5.4%

Consider a portfolio consisting of the following three stocks Portfolio Weight Volatility Correlation with Market Portfolio HEC Corp 0.25 12% 0.4 Green Midget 0.35 25% 0.6 Alive and Well 0.4 13% 0.5 The volatility of the market portfolio is 10% and it has an expected return of 8%. The risk-free rate is 3%. The expected return of the portfolio is closest to: 7.53% 10.50 6.25% 5.4%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 25P

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