Answered step by step
Verified Expert Solution
Question
1 Approved Answer
To achieve a zero standard deviation for a portfolio, calculate the weights of stock A and stock B, assuming the correlation coefficient is -1.
To achieve a zero standard deviation for a portfolio, calculate the weights of stock A and stock B, assuming the correlation coefficient is -1. Use the following information. (Round intermediate calculations and final answers to 2 decimal places, e.g. 31.21%.) State of the Probability of Expected return on Expected return on economy occurrence stock A in this state stock B in this state High growth 30% 38.5% 55.5% Moderate growth 25% 17.5% 25.5% Recession 45% -5.5% -15.5% Weight of stock A % Weight of stock B | %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
o achieve a zero standard deviation for the portfolio with stocks A and B and a correlation coeffici...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started