You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 40% and 60% respectively. X has an expected rate of return of 18% and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 9% if the risky portfolio, P, has a standard deviation of 25%. what is the standard deviation of the complete portfolio?
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 40% and 60% respectively. X has an expected rate of return of 18% and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 9% if the risky portfolio, P, has a standard deviation of 25%. what is the standard deviation of the complete portfolio?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury
bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X
and Y in P are 40% and 60% respectively. X has an expected rate of return of 18% and Y has an expected rate of
return of 10%. To form a complete portfolio with an expected rate of return of 9% if the risky portfolio, P, has a
standard deviation of 25%. what is the standard deviation of the complete portfolio?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F74306ebc-930f-47cd-8784-93dfead9c2ca%2F51192d01-07ac-407c-a72f-0bd51bb6b305%2Fhxruj5w5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury
bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X
and Y in P are 40% and 60% respectively. X has an expected rate of return of 18% and Y has an expected rate of
return of 10%. To form a complete portfolio with an expected rate of return of 9% if the risky portfolio, P, has a
standard deviation of 25%. what is the standard deviation of the complete portfolio?
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