Your portfolio invests in the stock of two companies. Company A’s stock has a variance of 0.25, while Company B’s stock has a standard deviation of 0.30. The correlation between the two stocks is 0.40. If 30% of your portfolio is invested in Company A, and 70% in Company B, what is the standard deviation of your portfolio? A. 28.74% B. 24.96% C. 30.30% D. 28.50%
Your portfolio invests in the stock of two companies. Company A’s stock has a variance of 0.25, while Company B’s stock has a standard deviation of 0.30. The correlation between the two stocks is 0.40. If 30% of your portfolio is invested in Company A, and 70% in Company B, what is the standard deviation of your portfolio? A. 28.74% B. 24.96% C. 30.30% D. 28.50%
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
Section: Chapter Questions
Problem 1PS
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Your portfolio invests in the stock of two companies. Company A’s stock has a variance of 0.25, while Company B’s stock has a standard deviation of 0.30. The correlation between the two stocks is 0.40. If 30% of your portfolio is invested in Company A, and 70% in Company B, what is the standard deviation of your portfolio?
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