You are given the opportunity to invest $2,000 in a special opportunity.This investment lasts for one year, and has only the following possible outcomes:Probability ReturnOutcome #1 15% +41%Outcome #2 45% +13%Outcome #3 25% -1%Outcome #4 15% -15%a. What is the expected return on this investment? What is the standarddeviation of this investment?b. Your portfolio currently has $18,000 and is well diversified. Your currentportfolio expected return is 5%, with a standard deviation of 22%. If youadded the investment from part a to your portfolio, what would be the newportfolio expected return?c. If the investment and your portfolio have a correlation of 0.44, what would bethe standard deviation of the combined portfolio?d. (Bonus: Up to 5 points): If you found a $2,000 investment with a 3% expectedreturn and a standard deviation of 30% are there any circumstances underwhich you would add it to your portfolio? Explain.
Hi, Thanks for using Just Answer. I am working on this problem and I'll post you my solution soon.
Hi, Here is my solution. I answered the questions in a word document and used excel to do most of the calculations. Please let me know if you have any questions. https://www.box.com/s/6387bc9d4fb5fe36bb17https://www.box.com/s/c1a41caca7a86acdfc33Thank you.unvrs41085.0407081829
CFA Level 2 Candidate