1F.13
13.Consider two stocks: Nike and Boeing. Nike has an expected return of 40% this year and Boeing has one of 20%. Nike and Boeing's standard deviations are both 15%. YOU DO NOT NEED TO DO ANY CALCULATIONS FOR THIS QUESTION.
If the correlation coefficient between the two stocks is greater than 0, but less than 1, could you find a combination of the two stocks that would give you a portfolio standard deviation of less than 15%? (3 pts)
If the correlation coefficient between the two stocks is -1, could you find a combination of the two stocks that would give you a portfolio standard deviation of 0? (3 pts)
Will the expected return change at all between the two scenarios? Explain. (4 pts)