intro to financial economics--nuig exam paper
You are considering investing in two shares, X and Y. The following data are available for the two shares:
Share X Share Y
Expected Return 11% 9%
Standard Deviation 16% 12%
Beta 1.30 0.95
What happens to the expected return and standard deviation of returns of the portfolio if the following conditions exist?
i) The correlation of returns between Share X and Y is +1.0.
ii) The correlation of returns between Share X and Y is +0.3
iii) The correlation of returns between Share X and Y is -0.8
What conclusions can you draw about the importance of the correlation coefficient?
I know the correlation explains how the share move together but I cant find anything about beta in my notes. I know its a measure of volatility but don't now how to use it here. emailed my lecturer but his off on holidays got automatic response thingy
Il sent great karma for any reply s.