Question
Consider the following probability distribution for stocks A and B: State Probability Return on A Return on B 1 .15 8% 8% 2 .2 13%
Consider the following probability distribution for stocks A and B:
| State | Probability | Return on A | Return on B |
| 1 | .15 | 8% | 8% |
| 2 | .2 | 13% | 7% |
| 3 | .15 | 12% | 6% |
| 4 | .3 | 14% | 9% |
| 5 | .2 | 16% | 11% |
If you invest 35% of your portfolio in stock A, and the rest (65%) in stock B, what would be your portfolio's standard deviation? Please enter your answer in percent rounded to the nearest basis point.
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Bakers Health Care Finance Basic Tools For Nonfinancial Managers
Authors: Thomas K. Ross
6th Edition
1284233162, 978-1284233162
