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Suppose you have a portfolio consisting of two stocks, Stock S and Stock T. $4,000 is...

Suppose you have a portfolio consisting of two stocks, Stock S and Stock T. $4,000 is invested in Stock S and $6,000 is invested in Stock T:

State               Probability                 Stock S            Stock T

Boom              0.10                             21%                 35%

Normal            ?                                  6%                   11%

Recession        0.60                             -17%               -40%

What is the standard deviation of Stock S?

  1. 0.195194
  2. 0.186379
  3. 0.168237
  4. 0.142076
  5. 0.137335

What is the portfolio variance?

  1. 0.117452
  2. 0.093821
  3. 0.051505
  4. 0.043497
  5. 0.038826

Solutions

Expert Solution

A)

B)

jeff jeffy answered 1 year ago
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