In: Finance
Consider the following probability distribution for stocks A and B:
State | Probability | Return on A | Return on B |
1 | .15 | 8% | 8% |
2 | .2 | 13% | 7% |
3 | .15 | 12% | 6% |
4 | .3 | 14% | 9% |
5 | .2 | 16% | 11% |
If you invest 35% of your portfolio in stock A, and the rest (65%) in stock B, what would be your portfolio's standard deviation? Please enter your answer in percent rounded to the nearest basis point.
Calculations-
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