Quiz.&Portfolio&
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Prof.!Isai!Guizar!
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Name:&_____________________&___________________________&
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Suppose an investor is evaluating a two-asset portfolio of the following securities:
Assumptions
Expected Return
Expected Risk (σ)
Apple (AAPL)
14.0%
22.0%
Best Buy (BBY)
19.0%
25.0%
Correlation (𝝆) = 0.60
a. What is the expected risk and return for a portfolio that is equally weighted?
b. What is the expected risk and return for a portfolio that is 70% Apple and 30% Best buy?
c. What is the minimum risk portfolio?
d. Assume the rate of return of a risk-free security is 3%. What is the tangency portfolio?
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