Consider two investment options: Stock A and Stock B. Every $100 invested in Stock A yields a return with a mean of $10 and standard deviation of $3. The mean and standard deviation of return from Stock B is $5 and $1, respectively. Assume the correlation between returns of the two stocks is -0.4. Assume you invest 20% of your fund of $100 in Stock A and the remaining 80% in Stock B. What is the standard deviation of the total return of your portfolio? Question options: 0.785 1.176 0.616 1.378

MATLAB: An Introduction with Applications
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Author:Amos Gilat
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Consider two investment options:
Stock A and Stock B. Every $100
invested in Stock A yields a return with
a mean of $10 and standard deviation
of $3. The mean and standard
deviation of return from Stock B is $5
and $1, respectively. Assume the
correlation between returns of the two
stocks is -0.4.
Assume you invest 20% of your fund of
$100 in Stock A and the remaining
80% in Stock B. What is the standard
deviation of the total return of your
portfolio?
Question options:
0.785
1.176
0.616
1.378
Transcribed Image Text:Consider two investment options: Stock A and Stock B. Every $100 invested in Stock A yields a return with a mean of $10 and standard deviation of $3. The mean and standard deviation of return from Stock B is $5 and $1, respectively. Assume the correlation between returns of the two stocks is -0.4. Assume you invest 20% of your fund of $100 in Stock A and the remaining 80% in Stock B. What is the standard deviation of the total return of your portfolio? Question options: 0.785 1.176 0.616 1.378
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