You have a sample of returns from Stocks A and B. What is the standard deviation of a portfolio consisting of 70% A and 30% B? Month Stock A Stock B 9% 6% 2 21% 8% 15% -2% 4 -8% 3% -2% 8% a) 7.9% b) 8.4% c) 7.5% d) 8.2%

You have a sample of returns from Stocks A and B. What is the standard deviation of a portfolio consisting of 70% A and 30% B? Month Stock A Stock B 9% 6% 2 21% 8% 15% -2% 4 -8% 3% -2% 8% a) 7.9% b) 8.4% c) 7.5% d) 8.2%

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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Question

You have a sample of returns from Stocks A and B.
What is the standard deviation of a portfolio consisting of 70% A and 30% B?
Month
Stock A
Stock B
1
9%
6%
2
21%
8%
3
15%
-2%
-8%
3%
-2%
8%
a) 7.9%
b) 8.4%
c) 7.5%
d) 8.2%

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Introduction

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Standard deviation of stock A

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Standard deviation of stock B

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Covariance computation

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Regression coefficient

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Standard deviation of the portfolio

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