Stock A has a standard deviation of 15 percent per year and stock B has a standard deviation of 21 percent per year.The correlation between stock A and stock B is .30.You have a portfolio of these two stocks wherein stock B has a portfolio weight of 60 percent.What is your portfolio standard deviation?
A)14.87 percent
B)15.50 percent
C)16.91 percent
D)17.45 percent
E)18.03 percent

Question

Quizplus · Accepted Answer

Var_Port = [(1 - .60)² × .15²] + [.60² × .21²] + [2 × (1 - .60) × .60 × .15 × .21 × .30] = .024314Std Dev_Port = √.024012 = 15.50 percent

Stock a Has a Standard Deviation of 15 Percent Per