Steve invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are and , respectively.

His portfolio's expected return and standard deviation are 8.7% and 6%, respectively.

Explanation:

portfolio's expected return = (amount invested in risky asset x expected rate of return) + (amount invested in T-bills x expected return) = (30% x 0.15) + (70% x 0.06) = 4.5% + 4.2% = 8.7%

standard deviation = amount invested in risky asset x √variance = 30% x √0.04 = 30% x 0.2 = 6%

the answer would be voluntary exchange -

"the act of buyers and sellers freely and willingly engaging in market transactions. moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred."

hope this : )

-shy

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.