CH. 08 Q7

Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: What is the expected retum on Andre's stock portfolio? 13.10% 14.55% 9.70s Suppose each stock in Andre's portfolio has a correlation coefficient of 0.4(0.4) with each of the other stacks. If the welghted average of the rick of the individual securities (as measured by their standard deviabiona) induded in the partially diversified four-stock portfolio is 30 the the portfolo's standard deviation (p) most likely is 304