Question
1.You are creating a portfolio of two stocks. The first one has a standard deviation of 20% and the second one has a standard deviation
1.You are creating a portfolio of two stocks. The first one has a standard deviation of 20% and the second one has a standard deviation of 50%. The correlation coefficient between the returns of the two is 0.2. You will invest 70% of the portfolio in the first stock and the rest in the second stock. What will be the standard deviation of this portfolio's returns? Answer in percent, rounded to one decimal place (e.g., 4.32%=4.3).
2.You are creating a portfolio of two stocks. The first one has a standard deviation of 10.0% and the second one has a standard deviation of 30.0%. The correlation coefficient between the returns of the two is -0.30. You will invest 70% of the portfolio in the first stock and the rest in the second stock. What will be the standard deviation of this portfolio's returns? Answer in percent, rounded to one decimal place (e.g., 4.32%=4.3).
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International Finance Theory And Policy
Authors: Paul Krugman, Maurice Obstfeld, Marc Melitz
12th Global Edition
1292417005, 978-1292417004
