Question

You have a portfolio of investment which consists of Stock A with a return of A% and Stock B with a return of B%. Given the following average returns and standard deviations for both Stock A and Stock B, M(A) = 18%, M(B) = 70% s(A) = 4%, s(B) = 11% what is the absolute risk (standard deviation) of your portfolio assuming that the returns of Stock A and Stock B are uncorrelated? Hint: Notice that the return of your portfolio will be A+B and the Variance Sum Laws apply to the variances not standard deviations. Answer should be in % accurate up to 2 decimal places.

          You have a portfolio of investment which consists of Stock A
with a return of A% and Stock B with a return of B%.  Given
the following average returns and standard deviations for both
Stock A and Stock B,
M(A) = 18%, M(B) = 70%
s(A) = 4%, s(B) = 11%
what is the absolute risk (standard deviation) of your portfolio
assuming that the returns of Stock A and Stock B are
uncorrelated?
Hint: Notice that the return of your portfolio will be
A+B and the Variance Sum Laws apply to the variances not standard
deviations.  Answer should be in % accurate up to 2 decimal
places.

Added by Catherine L.

Question

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