Suppose Wesley Publishings stock has a volatility of 40%, while Addison Printings stock has a volatility of

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Suppose Wesley Publishing’s stock has a volatility of 40%, while Addison Printing’s stock has a volatility of 20%. If the correlation between these stocks is 15%, what is the volatility of the following portfolios of Addison and Wesley:

(a) 100% Addison,

(b) 75% Addison and 25% Wesley, 

(c) 50% Addison and 50% Wesley.

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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