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Combining Risks Table 1 shows the returns of 3 stocks with the same average return and volatility during 3 years. Consider two portfolios of stocks:

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Combining Risks Table 1 shows the returns of 3 stocks with the same average return and volatility during 3 years. Consider two portfolios of stocks: - Portfolio 1 consists of equal investments of stocks A and B Portfolio 2 consists of equal investments of stocks B and C Table 1 Stock Returns Year 10% 5% 15% 10% 5% 5% 10% 15% 15% Determine the volatility of portfolio 1 Average Return Volatility 10% 5.0% 10.0% 5.0% 10.0% 5.0% Determine the volatility of portfolio 2

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