Question

The table below shows standard deviations and correlation coefficients for seven stocks from different countries. Calculate the variance of a portfolio with equal investments in each stock. (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Round your answer to 4 decimal places.)
Portfolio Varience:?

	BHP Billiton		Siemens		Nestlé		LVMH		Toronto Dominion Bank		Samsung		BP
BHP Billiton	1.00		0.28		0.37		0.40		0.16		0.40		0.14
Siemens			1.00		0.34		0.16		0.14		0.31		–0.12
Nestlé					1.00		0.09		0.10		0.02		0.10
LVMH							1.00		0.33		0.51		–0.07
Toronto Dominion Bank									1.00		0.10		–0.10
Samsung											1.00		–0.09
BP													1.00
Standard deviation (%)	25.00		36.80		47.80		23.30		17.00		37.50		45.40

Answer 1

Portfolio variance can be calculated using the MMULT() function of excel, as follows:

There are seven assets equally weighted so weight per asset = 1/7 = 14.29%

Portfolio variance = 0.0324

Note: The correlation matrix is symmetrical across the diagonal so both halves of the matrix are same.

Formulas: