Portfolio Standard deviation of What happens to the portfolio risk if market conditions reduce the risk of security B by 50%?

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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Angela’s portfolio holds security   A, which returned 12.0%, security   B, which returned 15.0% and security   C, which returned -5.0%.   At the beginning of the year 45% was invested in security A, 25.0% in security B and the remaining 30% was invested in security C. The correlation between AB is 0.75, between AC 0.35, and between BC -0.5. Securities A's standard deviation is 12%, security B's standard deviations is 15% and security C's is 10%.         

Required: Calculate the:

1. Portfolio Standard deviation of What happens to the portfolio risk if market conditions reduce the risk of security B by 50%? 

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