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Stock A's annual returns have a standard deviation of 31%. Stock B's annual returns have a standard deviation of 56%. The two stocks have a
Stock A's annual returns have a standard deviation of 31%. Stock B's annual returns have a standard deviation of 56%. The two stocks have a correlation of 0. Use calculus to find out what percentage of your money you should invest in Stock A in order to minimize the standard deviation of a portfolio of A and B. Go out four decimals - in other words, you should write 31.68% as .3168.
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