The Stock Market of Country a Has an Expected Return

question 89

Essay

The stock market of country A has an expected return of 5%, and standard deviation of expected return of 8%. The stock market of country B has an expected return of 15% and standard deviation of expected return of 10%.
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:

Gestalt Psychology

A theory of mind and behavior that proposes the human brain perceives things as whole patterns and configurations, rather than merely as the sum of their parts.

Psychoanalysis

A set of psychological theories and therapeutic techniques related to the study of the unconscious mind, founded by Sigmund Freud.

Humanistic Psychology

A psychological approach focusing on the comprehensive analysis of individuals and the distinctiveness of everyone's personal experiences.

Behaviorists

Researchers or practitioners who focus on observable behaviors rather than internal mental processes as the key to understanding psychological phenomena.