You Are Considering Investing in ZIN Mining Corp

You are considering investing in ZIN mining corp.Research into the company suggests that the company will achieve one of three possible returns over the next 12 months.The possible returns along with the probability of each are listed in the following table.
a.What is the expected return of ZIN?
b.What is the standard deviation of returns of ZIN?
You also consider the stock WMC,which has an expected return of 15% and a standard deviation of 4%.If you create a portfolio with 60% weight on ZIN and 40% WMC and the correlation coefficient is 0.8,then:
c.What is the expected return of this portfolio?
d.What is the risk of the portfolio?

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free