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Ben has $80,000 to invest and chooses to allocate his money among only Stocks P and Q. He invests three times as much in Stock
Ben has $80,000 to invest and chooses to allocate his money among only Stocks P and Q. He invests three times as much in Stock P as compared to his investments in Stock Q. What is the standard deviation of the returns of his portfolio?
State of Economy | Probability of State of Economy | Return if State Occurs | |
Stock P | Stock Q | ||
Boom | 25% | 11% | 5% |
Normal | 45% | 8% | 6% |
Recession | 25% | -5% | 8% |
Depression | 5% | -45% | 12% |
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