Question
There are two stocks in your portfolio. Stock Weight E(r) Variance A 1/3 9% 0.0036 B 2/3 15% 0.0081 a) Assume stock A and B
There are two stocks in your portfolio. Stock Weight E(r) Variance A 1/3 9% 0.0036 B 2/3 15% 0.0081 a) Assume stock A and B are perfectly positively correlated, calculate the risk and return for your portfolio. b) Repeat (a), assume the correlation is 0. Why is the risk now lower than in (a)?
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Multinational Finance
Authors: Kirt Butler
2nd Edition
0324004508, 978-0324004502
