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QUESTION

1.Expected return, risk and diversification Harry Joes has invested a third of his funds in

1.      Expected return, risk and diversification

Harry Joes has invested a third of his funds in

share 1 and 2/3 of his funds in share 2. His assessment of each investment is as follows:

A)     What are the expected return and the standard deviation of return on Harry's Portfolio?

B)     Recalculate the expected return and the standard deviation where the correlation between the returns is 0 and 1.0, respectively

C)     Is Harry better or worse off as a result of investing in two securities rather than in one security?

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