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A portfolio was created by investing 38% of the funds in Stock A (Variance = 6.25%) and the balance of the funds in Stock B (Standard deviation = 15%). If the correlation coefficient is -0.46, the portfolio’s standard deviation is closest to   A. 9.77%. B. 7.31%. C. 5.12%. D. 1.49%.

A portfolio was created by investing 38% of the funds in Stock A (Variance = 6.25%) and the balance of the funds in Stock B (Standard deviation = 15%). If the correlation coefficient is -0.46, the portfolio’s standard deviation is closest to   A. 9.77%. B. 7.31%. C. 5.12%. D. 1.49%.

Essentials Of Investments
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
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A portfolio was created by investing 38% of the funds in Stock A (Variance = 6.25%) and the balance of the funds in Stock B (Standard deviation = 15%). If the correlation coefficient is -0.46, the portfolio’s standard deviation is closest to


 

A.

9.77%.

B.

7.31%.

C.

5.12%.

D.

1.49%.

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