A portfolio invests in 35% in a stock S1 and the rest in another stock S2. The expected return and standard deviation of S1 are 23% and 35%, respectively. The expected return and standard deviation of S2 are 8% and 14%, respectively. The covariance between the two stocks is 0.0008. What is the standard deviation of the portfolio? Note: Write your answer in decimal (3 or more decimal places). For example, write 0.2544 instead of 25.44%
A portfolio invests in 35% in a stock S1 and the rest in another stock S2. The expected return and standard deviation of S1 are 23% and 35%, respectively. The expected return and standard deviation of S2 are 8% and 14%, respectively. The covariance between the two stocks is 0.0008. What is the standard deviation of the portfolio?
Note: Write your answer in decimal (3 or more decimal places). For example, write 0.2544 instead of 25.44%.
Portfolio refers to a combination or collection of financial instruments or securities stocks, bonds, commodities or mutual funds, etc owned by the investors and it is framed depending upon their income or the time frame for which they want to make the investment.
The Standard deviation of the Portfolio refers to the risk of the investment and helps in measuring the stability of the return from the portfolio.
Step by step
Solved in 4 steps
