Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.7%. Johnson & Johnson Walgreen Company E [R] 6.1% 10.8% SD [R] 16.5% 19.1% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is %. (Round to one decimal place.) b. The volatility (standard deviation). The volatility of the portfolio is%. (Round to one decimal place.)

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
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Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities
shown below, with a correlation of 22.7%.
Johnson & Johnson
Walgreen Company
E [R]
6.1%
10.8%
SD [R]
16.5%
19.1%
For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate:
a. The expected return.
b. The volatility (standard deviation).
a. The expected return.
The expected return of the portfolio is%. (Round to one decimal place.)
b. The volatility (standard deviation).
The volatility of the portfolio is%. (Round to one decimal place.)
Transcribed Image Text:Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.7%. Johnson & Johnson Walgreen Company E [R] 6.1% 10.8% SD [R] 16.5% 19.1% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is%. (Round to one decimal place.) b. The volatility (standard deviation). The volatility of the portfolio is%. (Round to one decimal place.)
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