onsider 123 Fund (which is invested in 35% High risk stock and 65% normal bonds).
Assume you have the following historical data of annual returns:
Return S.D.
Normal Stock 8% 20%
Risky Bonds 10% 35%
High Risk Stock 14% 40%
Normal Bonds 6% 10%
Assume High Risk Stocks and Normal Bonds have correlation coefficient of 0.24
Find the standard deviation of 123.
Please use 5 decimal places in your response.
Note: The right answer is 0.1679 Please explain step by step
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In terms of Porfolio Variance calculation/formula of 0.02819 your computation is different than mine of 0.8733428592 based on the formula you provided. Can you explain on how did you get the 0.02819 portfolio variance
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