Suppose General Motors stock has an expected return of 19% and a volatility of 40%​, and​ Molson-Coors Brewing has an expected return of 11% and a volatility of 30%. If the two stocks are​ uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 72% General Motors stock and 28% of​ Molson-Coors Brewing​ stock? b. Given your answer to ​(a​), is investing all of your money in​ Molson-Coors stock an efficient portfolio of these two​ stocks? c. Is investing all of your money in General Motors an efficient portfolio of these two​ stocks?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose General Motors stock has an expected return of
19%
and a volatility of
40%​,
and​ Molson-Coors Brewing has an expected return of
11%
and a volatility of
30%.
If the two stocks are​ uncorrelated,
a. What is the expected return and volatility of a portfolio consisting of
72%
General Motors stock and
28%
of​ Molson-Coors Brewing​ stock?
b. Given your answer to
​(a​),
is investing all of your money in​ Molson-Coors stock an efficient portfolio of these two​ stocks?
c. Is investing all of your money in General Motors an efficient portfolio of these two​ stocks?
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