A college student owns two securities: Apple and Coca- Cola.Apple has an expected return of 15 percent with a standard deviation of those returns being 11 percent.Coca-Cola has an expected return of 12 percent, and a standard deviation of 7 percent.The correlation of returns between Apple and Coca-Cola is 0.81.If the portfolio consist of $6,000 in Coca-Cola and $4,000 in Apple, what is the expected standard deviation of portfolio returns?
A)8.18%
B)13.20%
C)8.60%
D)9.71%

Question

Quizplus · Accepted Answer

σp = [(.6)²(.07)² + (.4)²(.11)² + 2(.6)(.4)(.07)(.11)(.81)].⁵
= 0.0818

A College Student Owns Two Securities: Apple and Coca- Cola