You have a portfolio which is comprised of 48 percent of stock A and 52 percent of stock B.What is the standard deviation of this portfolio?

A) 1.98 percent
B) 2.06 percent
C) 2.13 percent
D) 2.27 percent
E) 2.30 percent

Question

You have a portfolio which is comprised of 48 percent of stock A and 52 percent of stock B.What is the standard deviation of this portfolio?

A) 1.98 percent 
B) 2.06 percent 
C) 2.13 percent 
D) 2.27 percent 
E) 2.30 percent

Quizplus · Accepted Answer

E(R_Boom) = (0.48 × 8) + (0.52 × 17) = 12.68 E(R_Norm) = (0.48 × 11) + (0.52 × 12) = 11.52 E(R_Rec) = (0.48 × 14) + (0.52 × -8) = 2.56 E(R_port) = (0.20 × 12.68) + (0.75 × 11.52) + (0.05 × 2.56) = 11.304 Var_port = 0.20(12.68 - 11.304)²+ 0.75(11.52 - 11.304)²+ 0.05(2.56 - 11.304)² = 4.237 Std Dev_{port = √4.237 = 2.06 present}

You Have a Portfolio Which Is Comprised of 48 Percent