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 0.30.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 - 0.60)² × 0.15²] + [0.60² × 0.21²] + [2 × (1 - 0.60) × 0.60 × 0.15 × 0.21 × 0.30] = 0.024314 Std Dev_Port = √0.024012 = 15.50 percent

Stock a Has a Standard Deviation of 15 Percent Per