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Suppose that there are only two stocks in the market and a risk free asset E(Ra)=18% , SD(Ra)=15% E(Rb) 12%, SD(Rb)=7%) COV(Ra,Rb)=0 Rf=5%, Supposed
Suppose that there are only two stocks in the market and a risk free asset E(Ra)=18% , SD(Ra)=15% E(Rb) 12%, SD(Rb)=7%) COV(Ra,Rb)=0 Rf=5%, Supposed that you want to invest in a portfolio with E(Rp)=15%. a. Calculate the SD(Rp) b. Write down the portfolio's weights for each one of the securities you decided to invest in.
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To calculate the standard deviation SD of the portfolio SDRp we can use the formula for the portfolio variance SDRp sqrtwa2 SDRa2 wb2 SDRb2 2 wa wb CO...
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Fundamentals Of Investments Valuation And Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
10th Edition
1266824014, 9781266824012
