An investor forms a portfolio of two stocks, Alpha and Beta. Information regarding the two stocks is shown below: Stock Alpha Bravo Expected Return 8% 9% Standard Deviation 30% 40% The correlation between returns on Alpha and Bravo is 0.40. The investor will put 40% of her wealth in Alpha and the 60% of her wealth in Bravo. What is the standard deviation of the investor's portfolio? 34.28% 30.83% 28.47% 33.17% None are correct.
An investor forms a portfolio of two stocks, Alpha and Beta. Information regarding the two stocks is shown below: Stock Alpha Bravo Expected Return 8% 9% Standard Deviation 30% 40% The correlation between returns on Alpha and Bravo is 0.40. The investor will put 40% of her wealth in Alpha and the 60% of her wealth in Bravo. What is the standard deviation of the investor's portfolio? 34.28% 30.83% 28.47% 33.17% None are correct.
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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Transcribed Image Text:An investor forms a portfolio of two stocks, Alpha and Beta. Information regarding the two stocks is shown below:
Stock
Expected Return
Alpha
8%
Standard Deviation
30%
40%
Bravo
9%
The correlation between returns on Alpha and Bravo is 0.40. The investor will put 40% of her wealth in Alpha and the 60% of her wealth in
Bravo. What is the standard deviation of the investor's portfolio?
00
34.28%
30.83%
28.47%
33.17%
None are correct.
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