Two Asset Portfolio
Calculate the overall portfolio standard deviation or “risk of the portfolio”
Use 10% increments for the weights of the assets
Calculate variance and standard deviation of each stock and the correlation coefficient. Your expected return in #3 is in years, and your standard deviation is in days. Convert daily standard deviation to yearly standard deviation by considering the number of days in the year
Display investment opportunity set graphically and explain implications and potential investment strategies to consider
Create an Appendix for the novice investor. Clearly explain the meaning and implication of the following key variables or equations:
• CAPM equation
• Risk-Free Rate
• Risk Premium
• Beta
• Required Rate of Return
