The return on stock 1 has a standard deviation of 27% and the return on stock 2 has a standard deviation of 18%. Their correlation is -0.2. If you invest 20% in stock 1 and 80% in stock 2, what is the variance of the portfolio? What is the standard deviation of the portfolio?
The return on stock 1 has a standard deviation of 27% and the return on stock 2 has a standard deviation of 18%. Their correlation is -0.2. If you invest 20% in stock 1 and 80% in stock 2, what is the variance of the portfolio? What is the standard deviation of the portfolio?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The return on stock 1 has a standard deviation of 27% and the return on stock 2 has a standard deviation of 18%. Their correlation is -0.2.
If you invest 20% in stock 1 and 80% in stock 2, what is the variance of the portfolio?
What is the standard deviation of the portfolio?
[ dont use excel]
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