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    Standard Deviation of Portfolio & Beta of Stocks

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    Problem #3: Stock X has a standard deviation of returns of 0.6, and Stock Y has a standard deviation of 0.4. The correlation of the two stocks is 0.5. Compute the standard deviation of a portfolio invested half in X and half in Y.

    Problem #4: The expected standard deviation of market returns is 0.20.Maria Houseman has the following four stocks:

    (see chart in attached file)

    Compute the beta of each stock.

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    Solution Summary

    The solution calculates the standard deviation of a portfolio and the beta of stocks.