Question
An economy has many securities. The average variance v of returns is oka and the average covariance c between returns is 0.2. (a) What
An economy has many securities. The average variance v of returns is oka and the average covariance c between returns is 0.2. (a) What is the risk (as measured by the standard deviation of returns) of an equally-weighted portfolio containing 10 securities? (b) What is the minimum number of securities that must be held for the risk of an equally- weighted portfolio to be within 10% of the theoretical minimum?
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Answer 1 The standard deviation is calculated as follows sqr...Get Instant Access to Expert-Tailored Solutions
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Introduction To Corporate Finance
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