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    A Portfolio Total Risk Calculation

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    Iggy Bokie own a portfolio composed of three securities with the following characteristics.

    Security Beta Standard-Deviation Random-Error-Term Market Index
    A 1.20 5% .30
    B 1.05 8% .50
    C 0.90 2% .20

    If the standard deviation of the market index is 18%, what is the total risk of Iggy's portfolio?

    © BrainMass Inc. brainmass.com March 4, 2021, 5:42 pm ad1c9bdddf
    https://brainmass.com/business/strategy-and-business-analysis/portfolio-total-risk-calculation-7165

    Solution Summary

    The solution calculates the total risk of a portfolio comprising three securities using beta of securities, standard deviation of the market index and the random error terms.

    $2.19

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