Mr. Jones has a 2-stock portfolio with a total value of $510,000. $175,000 is invested in Stock A and the remainder is invested in Stock B. If standard deviation of Stock A is 16.10%, Stock B is 8.60%, and correlation between Stock A and Stock B is 0.50, what would be the expected risk on Mr. Jones’ portfolio (standard deviation of the portfolio return)? Calcualte with at least 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72.

Mr. Jones has a 2-stock portfolio with a total value of $510,000. $175,000 is invested in Stock A and the remainder is invested in Stock B. If standard deviation of Stock A is 16.10%, Stock B is 8.60%, and correlation between Stock A and Stock B is 0.50, what would be the expected risk on Mr. Jones’ portfolio (standard deviation of the portfolio return)? Calcualte with at least 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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