In: Finance
The expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) 14 % 11 % Standard deviation, σ 47 36 What is the standard deviation if the correlation is +1? 0? −1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Correlation +1 % Correlation 0 % Correlation −1 %
Standard deviation of a portfolio is mathematically represented as:
a) When correlation = +1
Standard deviation = 41.50%
b) When correlation = 0
Standard deviation = 29.60%
c) When correlation = -1
Standard deviation = 5.50%