How many variance terms and how many covariance terms do you need to calculate the risk of a 100-share portfolio? b. 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? c. 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? b. 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? c. What is the standard deviation of a fully diversified portfolio of such stocks?
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 6P
Related questions
Question
How many variance terms and how many covariance terms do you need to calculate the
risk of a 100-share portfolio?
b. 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?
c. What is the standard deviation of a fully diversified portfolio of such stocks?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning