Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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![Consider the following portfolio of assets:
Loan
Weight
1
0.30
2
0.70
Expected returni
ம
σ2
13%
11%
9.06% 82.0% P12=-0.87
8.72% 76.0% 012-75.0%
What is the variance of the portfolio (round to two decimals)?
Note: a^2 denotes the square of a. For example, 2^2 = 4, 3^2=9
(0.3)^2*(82.0%) + (0.7)^2*(76.0%) + (0.3) (0.7)(-0.87) (9.06%) (8.72%) = 30.19
(0.3)^2 (82.0%) + (0.7)^2*(76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 15.75
(0.3)^2*(82.0%) + (0.7)^2*(76.0%) + [(0.3) (0.7)]^2 (-0.87) (9.06%) (8.72%) = 41.59
(0.3) (82.0%) + (0.7) (76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 48.93](https://content.bartleby.com/qna-images/question/d4f7692c-f66c-4f95-96ad-45602df2ef0b/f001c547-4136-4413-9e5e-abb6554abaaf/suswews_processed.png)
Transcribed Image Text:Consider the following portfolio of assets:
Loan
Weight
1
0.30
2
0.70
Expected returni
ம
σ2
13%
11%
9.06% 82.0% P12=-0.87
8.72% 76.0% 012-75.0%
What is the variance of the portfolio (round to two decimals)?
Note: a^2 denotes the square of a. For example, 2^2 = 4, 3^2=9
(0.3)^2*(82.0%) + (0.7)^2*(76.0%) + (0.3) (0.7)(-0.87) (9.06%) (8.72%) = 30.19
(0.3)^2 (82.0%) + (0.7)^2*(76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 15.75
(0.3)^2*(82.0%) + (0.7)^2*(76.0%) + [(0.3) (0.7)]^2 (-0.87) (9.06%) (8.72%) = 41.59
(0.3) (82.0%) + (0.7) (76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 48.93
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