combining stock portfolio and a risk free bond


To cauculate the expected return and standard deviation of 150% of the stock portfolio and -50% of the risk free bond.

suppose we will invest 100k in total. Is it asking to invest 150K in the stock portfolio and sell 50K of the bond???


The expected return would be 1.5 × stock return – 0.5 × bond return.

The standard deviation of returns would be 1.5 × stocks’ standard deviation of returns.