Stock A has a standard deviation of 15 percent per year and stock B has a standard deviation of 8 percent per year.The correlation between stock A and stock B is .40.You have a portfolio of these two stocks wherein stock B has a portfolio weight of 40 percent.What is your portfolio variance?
A).01143
B).01214
C).01329
D).01437
E).01470

Question

Quizplus · Accepted Answer

Var_Port = [(1 - .40)² × .15²] + [.40² × .08²] + [2 × (1 - .40) × .40 × .15 × .08 × .40] = .011428

Stock a Has a Standard Deviation of 15 Percent Per