Business, 06.07.2021 15:20 lex3340

Suppose you hold a portfolio of two stocks in the healthcare industry. The future outcomes for these stocks depend mainly on the next healthcare bill to be passed by Congress. The possible outcomes and returns are: Outcome Probability Return for Stock A Return for Stock B
1=Republican Bill 0.8 12% -5%
2=Democratic Bill 0.2 3% 20%
What is the expected return and a standard deviation of a portfolio that has 50% of its value in stock A and 50% in stock B?
a) 9.9% and 3.2%
b) 7.5% and 4%
c) 5.1% and 3.2%

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Suppose you hold a portfolio of two stocks in the healthcare industry. The future outcomes for these...

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