You have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 29.00%, while Circumbendibus Wheels has volatility 48.20%. The correlation between the two shares' returns is 0.72. You have allocated 32.40% of your money to Tinkle.com. What is the volatility of your portfolio? 39.88% 32.70% 54.29% 15.91%
You have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 29.00%, while Circumbendibus Wheels has volatility 48.20%. The correlation between the two shares' returns is 0.72. You have allocated 32.40% of your money to Tinkle.com. What is the volatility of your portfolio? 39.88% 32.70% 54.29% 15.91%
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 invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 29.00%, while Circumbendibus Wheels has volatility 48.20%. The correlation between the two shares' returns is 0.72. You have allocated 32.40% of your money to Tinkle.com. What is the volatility of your portfolio?
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39.88% |
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32.70% |
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54.29% |
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15.91% |
Expert Solution
Step 1
Portfolio volatility is a measure of portfolio risk.
The portfolio volatility shows the tendency of the portfolio to deviate from its mean return.
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