Loans Loan Expected Standard Amount Return Deviation A $ 15 8.1% 1.1% million В $ 15 9.2% 1.3% million C $ 20 7.5 2.7% million

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
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Loans Loan
Expected
Standard
Amount
Return
Deviation
A
$ 15
8.1%
1.1%
million
B
$ 15
9.2%
1.3%
million
C
$ 20
7.5
2.7%
million
Transcribed Image Text:Loans Loan Expected Standard Amount Return Deviation A $ 15 8.1% 1.1% million B $ 15 9.2% 1.3% million C $ 20 7.5 2.7% million
f.
What is the risk (standard deviation of returns) on the bank's loan portfolio of Loans A, B & C,
if loan returns are uncorrelated (p = 0)?
Transcribed Image Text:f. What is the risk (standard deviation of returns) on the bank's loan portfolio of Loans A, B & C, if loan returns are uncorrelated (p = 0)?
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