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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