You are allocating your wealth between two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 36.10%, while Circumbendibus Wheels has volatility 57.30%. The correlation beteween the two shares' returns is 0.34. What percentage of your wealth should you allocate to Tinkle.com to minimise your portfolio's volatility?
You are allocating your wealth between two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 36.10%, while Circumbendibus Wheels has volatility 57.30%. The correlation beteween the two shares' returns is 0.34. What percentage of your wealth should you allocate to Tinkle.com to minimise your portfolio's volatility?
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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You are allocating your wealth between two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 36.10%, while Circumbendibus Wheels has volatility 57.30%. The correlation beteween the two shares' returns is 0.34. What percentage of your wealth should you allocate to Tinkle.com to minimise your portfolio's volatility?
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