Stock X has a standard deviation of 21 percent per year and stock Y has a standard deviation of 6 percent per year.The correlation between stock A and stock B is .38.You have a portfolio of these two stocks wherein stock X has a portfolio weight of 42 percent.What is your portfolio standard deviation?
A)8.89 percent
B)9.85 percent
C)10.64 percent
D)11.84 percent
E)12.92 percent

Question

Quizplus · Accepted Answer

Var_Port = [.42² × .21²] + [(1 - .42)² × .06²] + [2 × .42 × (1 - .42) × .21 × .06 × .38] = .011323Std Dev_Port = √.011323 = 10.64 percent

Stock X Has a Standard Deviation of 21 Percent Per