Consider a portfolio with two securities that is invested 40…
Consider a portfolio with two securities that is invested 40 percent in ABC and 60 percent in DEF. The stocks’ returns have a covariance of 0.0010. ABC’s stock has an expected return of 23.0 percent and a standard deviation of 22.0 percent. DEF’s stock has an expected return of 29.0 percent and a standard deviation of 31.5 percent. What is the variance of the return of the portfolio?
Read DetailsChallenging Which of the following is true of the total risk…
Challenging Which of the following is true of the total risk or standard deviation of a portfolio? (Note: “risk” is defined as total risk or standard deviation throughout) It can be greater than risk of the riskiest constituent stock It is always less than the risk of the least risky constituent stock It may be zero. It may be equal to the average of the risk of the constituent stocks
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