Use the table for the question(s) below.
Consider the following returns:

-The variance on a portfolio that is made up of equal investments in Stock × and Stock Y stock is closest to:
A) 0.12
B) 0.10
C) 0.69
D) 0.29

Question

Use the table for the question(s) below.
Consider the following returns:
 
-The variance on a portfolio that is made up of equal investments in Stock × and Stock Y stock is closest to:
A) 0.12 
B) 0.10 
C) 0.69 
D) 0.29

Quizplus · Accepted Answer

A) 11ea7e54_8c44_72bd_ba34_57f09dc7eb9a_TB1620_00 Var(R_p) = x₁^2Var(R₁) + x₂^2Var(R₂) + 2X₁X₂Cov(R₁,R₂) = (.50)2(0.125447467) + (.50)2(0.177795367) + 2(.5)(.5)(0.103446133) = 0.118913264

Use the Table for the Question(s) Below