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# Scott and Bill Corporation

by | Oct 28, 2021 | Homework Help

An investor wishes to analyze two common stocks, Scott Corporation and Bill Corporation, using the following information. Common Stock Expected Rate of Return Standard Deviation Scott Corp. 12% 6% Bill Corp. 20% 15% a. If the investor allocates 30% of his money to Scott Corporation and the remaining 70% to Bill Corporation, the standard deviation for the market portfolio is 10%, and the correlation of returns on the two stocks is 0.50, what is the expected return and standard deviation of the portfolio? explain what happens to the expected return and standard deviation when you reallocate your portfolio and invest 50% in each stock.Expected Return is (12% * 30%) + (20% * 70%) = 17.6%Standard Deviation = [(.3*.3*.06*.06)+(.7*.7*.15*.15)+(2*.3*.7*.15*.06) ]^.5 = 12.3% If the weight is 50-50, then,Expected Return (12% * 50*) +…

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