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Hi,

I am working on Chapt.4 end of chapter Q&A (which I now understand are not written by David! ). I am slightly confused by the second portion of Q12 (p96 of study notes) -"what are the mean and standard deviation of a portfolio where the return is a 50/50 mixture distribution of A and B"

Florence

I am working on Chapt.4 end of chapter Q&A (which I now understand are not written by David! ). I am slightly confused by the second portion of Q12 (p96 of study notes) -"what are the mean and standard deviation of a portfolio where the return is a 50/50 mixture distribution of A and B"

- first of all, wasn't 50% of A and 50% of B a certain type of mixture distribution as well?
- second of all, if for the first part, my pdf is f(x)= 0.5A +0.5B, then what is my pdf for the second part of the question, i.e. I am not sure I understand "the return is a 50/50 mixture distribution of A and B" -> what mixture pdf does this translate into? I understand the integration part itself but I need to establish my pdf to then calculate my mean/standard deviation.

Florence

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