An investor has $100 to invest and two investments between which to divide it. If she invests the entire amount in the first investment, her return will be X while if she invests the entire amount in the second investment her return will by Y. Both X and Y have mean $9 and standard deviation $3.7. The correlation between x and y is 0.3. find the mean return and risk if she invests $31 in the first investment and $69 in the second.

The mean return is $9 and the risk is $3.1.

Step-by-step explanation:

It is provided that on investing an amount of $100 in the two investments the return will be X and Y.

Given:

It is also provided that the investor invested $31 and $69 in the first and second investment respectively.

The return equation will be:

Compute the expected value of return as follows:

Thus, the mean return is $9.

Compute the risk as follows:

Risk = SD (0.31X + 0.69Y)

Thus, the risk is $3.1.

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