Business, 17.04.2020 00:30 sarahsteelman
The Bank of Tinytown has two $20,000 loans that have the following characteristics: Loan A has an expected return of 10 percent and a standard deviation of returns of 10 percent. The expected return and standard deviation of returns for loan B are 12 percent and 20 percent, respectively. a. If the correlation coefficient between loans A and B is .15, what are the expected return and standard deviation of this portfolio?b. What is the standard deviation of the portfolio if the correlation is -.15?c. What role does the covariance, or correlation, play in the risk reduction attributes of modern portfolio theory?
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The Bank of Tinytown has two $20,000 loans that have the following characteristics: Loan A has an ex...
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