The Stock Market of Country a Has an Expected Return

question 31

Essay

The stock market of country A has an expected return of 5 percent,and standard deviation of expected return of 8 percent.The stock market of country B has an expected return of 15 percent and standard deviation of expected return of 10 percent.
Assume that the correlation of expected return between A and B is negative 1.Calculate the standard deviation of expected return of the portfolio in the last question.

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Definitions:

Best Use

Optimal allocation or application of resources to maximize efficiency or value.

Positive Statement

An objective statement based on factual information or data that can be tested or rejected through observation.

Normative Statement

A value-based statement that expresses an opinion about what ought to be rather than what is factual.

Oil Refineries

Facilities where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, and heating oil.