Calculate the risk (standard deviation) of the following two-security portfolio if the correlation coefficient between the two securities is equal to 0.5.
$\begin{array}{lcc} & \underline { \text { Variance } }&\underline { \text { Weight (in the portfolio) }} \\ \text { Security A } & 10 & 0.3 \\\text { Security B } & 20 & 0.7\end{array}$
A) 17.0 percent
B) 5.4 percent
C) 2.0 percent
D) 3.7 percent

Question

Calculate the risk (standard deviation) of the following two-security portfolio if the correlation coefficient between the two securities is equal to 0.5.

\begin{array}{lcc} & \underline { \text { Variance } }&\underline { \text { Weight (in the portfolio) }} \\ \text { Security A } & 10 & 0.3 \\\text { Security B } & 20 & 0.7\end{array}

A) 17.0 percent
B) 5.4 percent
C) 2.0 percent
D) 3.7 percent

Quizplus · Accepted Answer

The Answer of Calculate the risk (standard deviation) of the following two-security portfolio if the correlation coefficient between the two securities is equal to 0.5. $\begin{array}{lcc} & \underline { \text { Variance } }&\underline { \text { Weight (in the portfolio) }} \ \text { Security A } & 10 & 0.3 \ \text { Security B } & 20 & 0.7 \end{array}$ A) 17.0 percent B) 5.4 percent C) 2.0 percent D) 3.7 percent

Calculate the Risk (Standard Deviation) of the Following Two-Security Portfolio