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Irene Adler is considering investing in the common stock ofHolmes and Watson. The followin

Irene Adler is considering investing in the common stock ofHolmes and Watson. The followin

Irene Adler is considering investing in the common stock ofHolmes and Watson. The following data are available for the twosecurities.

................... Expected Return ..... Standard Deviation

Holmes .............. 0.12 ......................... 0.08

Watson ............. 0.19 .......................... 0.25

.

If she invests 60% of her funds Holmes and 40% in Watson, and ifthe correlation of returns between these two securities is 0.45,what is the portfolio’s expected return and standard deviation?

 

A.

14.8% and 12.89%

 

B.

13.6% and 11.03%

 

C.

14.6% and 13.94%

 

D.

14.4% and 11.03%

 

E.

13.21% and 10.08%

Abhinav 04-Dec-2019

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