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What is the standard deviation? Application: Mutual Fund Return Let XA and X, be the returns of stocks A and B. E[X] = 10 (%)

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Application: Mutual Fund Return Let XA and X, be the returns of stocks A and B. E[X] = 10 (%) and Var[X2] = 9 (%2) (Stdev[X2]= 3 %) E[X3] = 20 (%) and Var[X2] = 25 (%2) (Stdev[X2]= 5 %) For now, assume returns are independent. (2) What is the standard deviation of the return, Stdev[R]? Var[R] = Var[0.5X+ 0.5XB]= (0.5). Vor(Xa) +(655. Vorlxg). Stdev[R]= What hannene if X and Y are not independent? 25:36 / 38:12 20 000 F DOO F 15 # 3 2 $ 4 % 5 & 7 6 8 9 0

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