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Suppose that the standard deviation of returns from a typical share is about 0.50 for 50%) a year. The correlation between the returns of each

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Suppose that the standard deviation of returns from a typical share is about 0.50 for 50%) a year. The correlation between the returns of each pair of shares is about 0.6. a. Calculate the variance and standard deviation of the returns on a portfolio that has equal investments in 2 shares, 3 shares, and so on, up to 10 shares. (Use decimal values, not percents, in your calculations. Do not round intermediate calculations. Round the "Variance" answers to 6 decimal places. Round the "Standard Deviation" answers to 3 decimal places.) No. of Shares 1 2 3 Answer is complete and correct. Standard Variance Deviation(%) 0.250000 0.500 0 200000 0.447 0.183333 0.428 0.175000 0418 0.170000 0.412 0.166667 0.408 0.164286 0.405 0.162500 0.403 0.161111 0.401 4 5 6 7 8 9 Next > b. How large is the underlying market variance that cannot be diversified away? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Answer is complete and correct. Market rik 0 150 c. Now assume that the correlation between each pair of stocks is zero Calculate the variance and standard deviation of the returns on a portfolio that has equal investments in 2 shares, 3 shares, and so on, up to 10 shares (Use decimal values, not percents, in your calculations. Do not round intermediate calculations. Round the "Variance" answers to 6 decimal places. Round the "Standard Deviation" answers to 3 decimal places.) Answer is not complete. No. of Shares Variance Standard Deviation%) 0.060000 c. Now assume that the correlation between each pair of stocks is zero. Calculate the variance and standard deviation of the returns on a portfolio that has equal investments in 2 shares, 3 shares, and so on, up to 10 shares (Use decimal values, not percents, in your calculations. Do not round intermediate calculations. Round the "Variance" answers to 6 decimal places. Round the "Standard Deviation" answers to 3 decimal places.) No. of Shares 1 Answer is not complete. Standard Variance Deviation(%) 0.060000 2 3 4 6 6 7 8 9 10

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