Question

Assume the following statistics for two companies:  Blue Plc. and Purple Plc Blue Plc. Purple Plc Average...

Assume the following statistics for two companies:  Blue Plc. and Purple Plc

Blue Plc. Purple Plc
Average return 17.50% 30.00%
Variance 0.05 0.17
Standard deviation 22.36% 41.23%
Correlation 0.5
Portfolio weights
% in Blue Plc. 50%
% in Purple Plc. 50%

i. Calculate the covariance between the two shares

ii. Calculate the expected portfolio return and portfolio variance

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