Standard deviation of a portfolio
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You put half of your money in a stock that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in another stock that has an expected return of 6% and a standard deviation of 12%. The two stocks have a correlation coefficient of 0.55. The standard deviation of the resulting portfolio will be:
a) more than 18% but less than 24%
b) equal to 18%
c) less than 18%
d) there is not sufficient information to answer this question
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Solution Summary
The solution explains how to calculate the standard deviation of a portfolio.
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The standard deviation of a portfolio is calculated as
Std Deviation =Square ...
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