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7 Mason invests $45,000 of his $120,000 available assets into a Vanguard S&P 500 Index Fund with the remainder in the DFA Small Cap Value
7 Mason invests $45,000 of his $120,000 available assets into a Vanguard S&P 500 Index Fund with the remainder in the DFA Small Cap Value Fund. The Vanguard S&P 500 Index Fund and the DFA Small Cap Value Fund are positively correlated. Changes in the DFA Small Cap Value Fund explain 75% of the returns for the Vanguard S&P 500 Index Fund. If the Vanguard S&P 500 Index Fund has a standard deviation of 13% and the DFA Small Cap Value Fund has a standard deviation of 18%, what is the standard deviation of the combined portfolio? (Answer in decimals rounding to the nearest 0.001)
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