well-diversified portfolio
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You have $400,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $200,000. Consider the summary measures in the following table:
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| Investment |
Expected Return |
Standard Deviation |
| Old portfolio |
6% |
16% |
| House |
8% |
20% |
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| The correlation coefficient between your portfolio and the house is 0.38. |
| a. |
What is the expected return and the standard deviation of your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
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