Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Two stocks X and Y with the same standard deviation of returns sigma = 0 . 8 8 and correlation coefficient of their returns

Two stocks X and Y with the same standard deviation of returns \sigma =0.88 and correlation coefficient of their returns pXY =-0.45. Calculate the result of diversifying two portfolios consisting of stocks X and Y in ratios of 0.30-0.70 and 0.50-0.50 respectively. How do you comment on the comparison of results?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions