5 of 30 You have observed the following information about the two stocks you hold in your portfolio: Xxs Yyk Expected Return 15% 9% Standard Deviation 8% 5% Investment Value $30,000 $70,000 The correlation between Xxs and Yyk is -0.40 (negative 40). The standard deviation of your portfolio is closest to: ? a. 4.24% ? b. 5.13% ? c. 3.36% ? d. 4.97% ? e. 3.83%
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The weights are the investment values of each sock. Expected Return of Xxs = 15% Expected Return of Yyk = 9% Weighted Average Expected Return = (15% * $30,000 + 9% * $70,000) / ($30,000 + $70,000) = ($4,500 + $6,300) / $100,000 = $10,800 / $100,000 = 10.8% Show more…
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