The Stock Market of Country a Has an Expected Return

question 68

Essay

The stock market of country A has an expected return of 5%, and a standard deviation of expected return of 8%. The stock market of country B has an expected return of 15% and a standard deviation of expected return of 10%.
-Assume that the correlation of expected return between security A and B is 0.2.Calculate the standard deviation of expected return of a portfolio that has half of its money invested in A and half in B.

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Definitions:

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced; represents the per unit cost of production.

Marginal Cost

The price increase caused by the creation of one more unit of a product or service.

Microsoft

An American multinational technology company known for its software, services, devices, and solutions.

Negative Returns

A situation in which a company or investment incurs more cost than the income it generates, leading to financial loss.