Question
Suppose you have a portfolio consisting of four stocks: Stock A, Stock B, Stock C, and Stock D. The following amounts are invested in each
Suppose you have a portfolio consisting of four stocks: Stock A, Stock B, Stock C, and Stock D. The following amounts are invested in each stock: Stock A = $5,000; Stock B = $7,000; Stock C = $8,000; and Stock D = $5,000.
| State of Economy | Probability of State | Stock A | Stock B | Stock C | Stock D |
| Boom | 25% | -30% | -8% | 13% | -10% |
| Normal | 45% | -4% | 2% | 5% | 3% |
| Recession | ? | -25% | 11% | -2% | 16% |
What is the portfolio standard deviation?
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Personal Finance
Authors: Jack Kapoor
12th Edition
125996776X, 9781259967764
