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You invest 41% of your money in Stock Y and the rest in Stock Z. The standard deviation of Stock Y's annual returns is 53%

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You invest 41% of your money in Stock Y and the rest in Stock Z. The standard deviation of Stock Y's annual returns is 53% and the standard deviation of Stock Z's annual returns is 47%. The standard deviation of the portfolio's annual returns is 42%. By how many percentage points did diversification reduce your risk in this case? Write your answer out to three decimals - for example, write 6.2% as .062. Answer: Check

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