Question
Calculate the standard deviation and return of a portfolio consisting of 60% of Security A and 40% of Security B. Assume the correlation coefficient between
Calculate the standard deviation and return of a portfolio consisting of 60% of Security A and 40% of Security B. Assume the correlation coefficient between stock A and stock B is 0.55. Interpret the benefit of a portfolio over individual stock investment (in case of security A and B).
Year Security A return (%) Security B return (%)
2015 20 15
2016 22 12
2017 18 11
2018 15 10
2019 11 11
( The above question contains 20 Marks. Please elaborate answer min of 600 words )
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Solution Calculation of Standard Deviation and variance of security A B Year Security A return Security B return Deviation A 2 deviation B 2 2015 20 1...Get Instant Access to Expert-Tailored Solutions
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