Chapter 6 6.7 Part(iii)(b)

Discussion in 'CM2' started by Chirag Wadhwa, May 19, 2022.

  1. Chirag Wadhwa

    Chirag Wadhwa Keen member

  2. Steve Hales

    Steve Hales ActEd Tutor Staff Member

    E_p is the expected return of any portfolio made from combinations of Asset 1 and Asset 2. So one legitimate portfolio is when only Asset 1 is held, and then E_p=E_1. Alternatively, the particular portfolio being considered could have been 100% invested in Asset 2 instead, which would lead to the point (sigma2,E2).
     

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