Toyota Corp's stock is $32 per share. Its expected return is 25% and variance is 15%. Honda Corp's stock is $20 per share. Its expected return is 20% and variance is 7%. Benz Corp's stock is $42 per share. Its expected return is 11% and variance 7%. The covariance between Toyota and Honda is 0.03. What would be the standard deviation of a portfolio consisting of 50% Toyota and 50% ?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Toyota Corp's stock is $32 per share. Its expected return is 25% and variance is 15%. Honda Corp's stock is $20 per share. Its expected return is 20% and variance is 7%. Benz Corp's stock is $42 per share. Its expected return is 11% and variance 7%. The covariance between Toyota and Honda is 0.03. What would be the standard deviation of a portfolio consisting of 50% Toyota and 50% ?
OWL says the answer is 0.15, Please how to achieve this answer with steps in excel if possible.
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