An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are and respectively.

expected rate of return = (Weightage of risky asset × return of risky asset) + (Weightage of treasury bill × return of treasury bill) ........................1

put here value

expected rate of return = (0.70 × 0.15) + (0.30 × 0.05)

expected rate of return = 10.5% + 1.5%

expected rate of return = 12%

and

and now we get standard deviation that is

standard deviation = Weightage of risky asset × ([tex]variance ^{half}[/tex])

standard deviation = 0.70 × ([tex]0.05^{0.5}[/tex])

standard deviation = 15.7%

An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are __________ and __________ respectively.

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An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are and respectively.