How many variance terms and how many covariance terms do you need to calculate the risk of a 100-share portfolio? b. Suppose that all stocks had a standard deviation of 30% and a correlation with each other of 0.4. What is the standard deviation of the returns on a portfolio that has equal holdings in 50 stocks? c. What is the standard deviation of a fully diversified portfolio of such stocks?

How many variance terms and how many covariance terms do you need to calculate the risk of a 100-share portfolio? b. Suppose that all stocks had a standard deviation of 30% and a correlation with each other of 0.4. What is the standard deviation of the returns on a portfolio that has equal holdings in 50 stocks? c. What is the standard deviation of a fully diversified portfolio of such stocks?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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