The Expected Return of a Portfolio of Two Investments Will

question 123

True/False

The expected return of a portfolio of two investments will be equal to the sum of the expected returns of the two investments plus twice the covariance between the investments.

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Definitions:

Mean

The average of a set of numbers, calculated by adding all the numbers together and dividing by the count of those numbers.

Sampling Error

Differences between statistics calculated from a sample and statistics pertaining to the population from which the sample is drawn due to random, chance factors.

Confidence Interval

A sequence of values, from sample statistic studies, expected to encase the value of a population characteristic not yet revealed.

Confidence Interval

A spectrum of numbers obtained from sample observations which is expected to include the value of an unidentified population parameter, given a certain confidence degree.