. Consider the following expected returns, risks, and correlations: Stock Expected Return Standard Deviation Correlation with British Gas Correlation with Vodafone Correlation with John Lewis British Gas 14% 6% 1.0 -1.0 0.0 Vodafone 44% 24% -1.0 1.0 0.7 John Lewis 23% 14% 0.0 0.7 1.0 The risk of a portfolio that is equally invested in British Gas and Vodafone is closest to ________. A. 8.1% B. 9.0% C. 10.8% D. 5.4%
. Consider the following expected returns, risks, and correlations: Stock Expected Return Standard Deviation Correlation with British Gas Correlation with Vodafone Correlation with John Lewis British Gas 14% 6% 1.0 -1.0 0.0 Vodafone 44% 24% -1.0 1.0 0.7 John Lewis 23% 14% 0.0 0.7 1.0 The risk of a portfolio that is equally invested in British Gas and Vodafone is closest to ________. A. 8.1% B. 9.0% C. 10.8% D. 5.4%
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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4. Consider the following expected returns, risks, and correlations:
|
Stock |
Expected Return |
Standard Deviation |
Correlation with British Gas |
Correlation with Vodafone |
Correlation with John Lewis |
|
British Gas |
14% |
6% |
1.0 |
-1.0 |
0.0 |
|
Vodafone |
44% |
24% |
-1.0 |
1.0 |
0.7 |
|
John Lewis |
23% |
14% |
0.0 |
0.7 |
1.0 |
The risk of a portfolio that is equally invested in British Gas and Vodafone is closest to ________.
| A. |
8.1% |
|
| B. |
9.0% |
|
| C. |
10.8% |
|
| D. |
5.4% |
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