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Consider the returns on Jude's portfolio, comprised of 45% in Fund Garden and 55% in Fund Heaven? State of Economy Probability of State of Economy
Consider the returns on Jude's portfolio, comprised of 45% in Fund Garden and 55% in Fund Heaven? State of Economy Probability of State of Economy Returns If State Occurs Fund Garden Fund Heaven Boom 36% 21% 13% Normal 64% 13% 546 A rational investor would prefer the portfolio to the individual funs because A Portfolio Standard deviation is a weighted average of the standard deviations of the two funds. B, Portfolio standard deviation could be smaller than lower of the two standard deviations of the two funds. C. Portfolio standard deviation would be lower during normal State of economy D. Portfolio standard deviation could be greater than higher of the two standard deviations of the two funds
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