Below are the returns for two assets;
State of nature
Very strong growth
Calculate the two variances and Cov (r1, r2). If assets 1 and 2 are combined 50-50 into a portfolio, what is the variance of this portfolio? Show your calculations.
Variance tells us the degree of spread in
=the value of the one observationn
=the mean value of all observations
n=the number of observations