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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
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 economy | Probability of occurrence | Expected return on stock A in this state | Expected return on stock B in this state | |||
---|---|---|---|---|---|---|
High growth | 30% | 40.5% | 57.5% | |||
Moderate growth | 25% | 19.5% | 27.5% | |||
Recession | 45% | - 7.5% | - 17.5% |
Weight of stock A | enter weight of stock A in percentages % | |
---|---|---|
Weight of stock B | enter weight of stock B in percentages % |
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