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Troy is considering re-balancing his brokerage account portfolio by selling the Oil and Auto stock. He wants to invest in Tiny and Mega co stock
Troy is considering re-balancing his brokerage account portfolio by selling the Oil and Auto stock. He wants to invest in Tiny and Mega co stock as follows: 60% in Tiny and 40% in Mega. These securities have a tendency to not move together since the correlation between them is only .3. What will be the standard deviation for the new portfolio?
Details of the Brokerage Account Stock Shares Beta Std. Dev Div Yield Avg. Return Cost FMV Mega co 1000 .88 12.5% 4.0% 12.5% Tiny co 1000 1.24 18% 0 8,046.4714,500 15% 10,724.35 12,333 Oil co 1000 1.00 1096 3.5% 8% 1,135.70 15,150 Auto co 1000 1.12 10% 3.0% 10% 12,124.72 16,138 TOTAL 58,121 Note: The stock portfolio has a correlation coefficient with the market of .80Step by Step Solution
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