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I am having the worst time with variance. I don't know why.  Anyways here is the question and what I have so far:  Consider a portfolio that consists of two assets which we call A and B. Let X be the annual rate of return from A and Y denote the annual rate of return from B. Let E[X] = 0.15; E[Y] = 0.20; Var[X] = 0.052; Var[Y] = 0.072 and CORR[X, Y ] = 0.30 Suppose the fraction of portfolio invested in asset B is f and the fraction invested in A is 1 - f. Let f vary from 0 to 1 in increments of 5% (i.e., f = 0.0; 0.05; 0.10; ... ; 1.0). Compute the mean and standard deviation of the annual rate of return of the portfolio. Plot the standard deviation as a function of the return. I've managed to fill in the coordinates for A&B but I do not know why I can't get the variance. How do I find the variance for the data sets. A(1-f) B (f) Expected Return Variance   1 0 0.15     0.95 0.05 0.1525     0.9 0.1 0.155     0.85 0.15 0.1575     0.8 0.2 0.16     0.75 0.25 0.1625     0.7 0.3 0.165     0.65 0.35 0.1675     0.6 0.4 0.17     0.55 0.45 0.1725     0.5 0.5 0.175     0.45 0.55 0.1775     0.4 0.6 0.18     0.35 0.65 0.1825     0.3 0.7 0.185     0.25 0.75 0.1875

I am having the worst time with variance. I don't know why.  Anyways here is the question and what I have so far:  Consider a portfolio that consists of two assets which we call A and B. Let X be the annual rate of return from A and Y denote the annual rate of return from B. Let E[X] = 0.15; E[Y] = 0.20; Var[X] = 0.052; Var[Y] = 0.072 and CORR[X, Y ] = 0.30 Suppose the fraction of portfolio invested in asset B is f and the fraction invested in A is 1 - f. Let f vary from 0 to 1 in increments of 5% (i.e., f = 0.0; 0.05; 0.10; ... ; 1.0). Compute the mean and standard deviation of the annual rate of return of the portfolio. Plot the standard deviation as a function of the return. I've managed to fill in the coordinates for A&B but I do not know why I can't get the variance. How do I find the variance for the data sets. A(1-f) B (f) Expected Return Variance   1 0 0.15     0.95 0.05 0.1525     0.9 0.1 0.155     0.85 0.15 0.1575     0.8 0.2 0.16     0.75 0.25 0.1625     0.7 0.3 0.165     0.65 0.35 0.1675     0.6 0.4 0.17     0.55 0.45 0.1725     0.5 0.5 0.175     0.45 0.55 0.1775     0.4 0.6 0.18     0.35 0.65 0.1825     0.3 0.7 0.185     0.25 0.75 0.1875

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
Section: Chapter Questions
Problem 1PS
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I am having the worst time with variance. I don't know why. 

Anyways here is the question and what I have so far: 

Consider a portfolio that consists of two assets which we call A and B. Let X be the annual rate of return from A and Y denote the annual rate of return from B. Let
E[X] = 0.15; E[Y] = 0.20; Var[X] = 0.052; Var[Y] = 0.072 and CORR[X, Y ] = 0.30

Suppose the fraction of portfolio invested in asset B is f and the fraction invested in A is 1 - f. Let f vary from 0 to 1 in increments of 5% (i.e., f = 0.0; 0.05; 0.10; ... ; 1.0). Compute the mean and standard deviation of the annual rate of return of the portfolio. Plot the standard deviation as a function of the return.

I've managed to fill in the coordinates for A&B but I do not know why I can't get the variance. How do I find the variance for the data sets.

A(1-f) B (f) Expected Return Variance  
1 0 0.15    
0.95 0.05 0.1525    
0.9 0.1 0.155    
0.85 0.15 0.1575    
0.8 0.2 0.16    
0.75 0.25 0.1625    
0.7 0.3 0.165    
0.65 0.35 0.1675    
0.6 0.4 0.17    
0.55 0.45 0.1725    
0.5 0.5 0.175    
0.45 0.55 0.1775    
0.4 0.6 0.18    
0.35 0.65 0.1825    
0.3 0.7 0.185    
0.25 0.75 0.1875    
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