Emmy is analysing a two-share portfolio that consists of a utility share and a commodity share. She knows that the return on the utility has a standard deviation of 35 percent, and the return on the commodity has a standard deviation of 41 percent.  Calculate the variance of the portfolio if the covariance (σ12) is 0.16, assuming an equal proportion of each share in Emmy’s portfolio

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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Emmy is analysing a two-share portfolio that consists of a utility share and a commodity share. She knows that the return on the utility has a standard deviation of 35 percent, and the return on the commodity has a standard deviation of 41 percent.  Calculate the variance of the portfolio if the covariance (σ12) is 0.16, assuming an equal proportion of each share in Emmy’s portfolio

Round your answer to 2 decimal places. E.g. if the final value is 5.8312%, please type 5.83 in the answer box (do not type the percentage sign).

Variance, Var(R2 asset port) =              

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