How many variance terms and how many covariance terms do you need to calculate the risk of a 100-share portfolio? Suppose that all stocks had a standard deviation of 30% and a correlation with each other of 0.4. What is the standard deviation of the returns on a portfolio that has equal holdings in 50 stocks? What is the standard deviation of a fully diversified portfolio of such stocks?

How many variance terms and how many covariance terms do you need to calculate the risk of a 100-share portfolio? Suppose that all stocks had a standard deviation of 30% and a correlation with each other of 0.4. What is the standard deviation of the returns on a portfolio that has equal holdings in 50 stocks? What is the standard deviation of a fully diversified portfolio of such stocks?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 6P

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