Business, 07.03.2020 00:16 dgayles8761

The two stocks in your portfolio, X and Y, have independent returns, so the correlation between them, rXY is zero. Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock Y. Both stocks have an expected return of 15%, betas of 1.6, and standard deviations of 30%. Which of the following statements best describes the characteristics of your 2-stock portfolio?

a. Your portfolio has a standard deviation greater than 30% and a beta equal to 1.6.
b. Your portfolio has a beta equal to 1.6, and its expected return is 15%.
c. Your portfolio has a beta greater than 1.6, and its expected return is greater than 15%.
d. Your portfolio has a standard deviation of 30%, and its expected return is 15%.
e. Your portfolio has a standard deviation less than 30%, and its beta is greater than 1.6.

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