Problem Set 2 helpful hints

Problem Set 2 is now available from the course website at http://fin4335.garven.com/fall2018/ps2.pdf; its due date is Tuesday, September 4.

Problem Set 2 consists of two problems. The first problem requires calculating expected value, standard deviation, and correlation, and using this information as inputs into determining expected returns and standard deviations for 2-asset portfolios; see pp. 17-23 of the http://fin4335.garven.com/fall2018/lecture3.pdf lecture note for coverage of this topic. The second problem involves using the standard normal probability distribution to calculate probabilities of earning various levels of return by investing in risky securities and portfolios. We will devote tomorrow’s class meeting to these and related topics.

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