5 QUESTION 10You have a portfolio of investment which consists of Stock A with a return of A% and Stock B with a return of B%. Given the following averagereturns and standard deviations for both Stock A and Stock B,M(A) = 12%, M(B) = 40%S(A) = 2%, s(B) = 11%what is the absolute risk (standard deviation) of your portfolio assuming that the returns of Stock A and Stock B are uncorrelated?Hint: Notice that the return of your portfollo will be A+B and the Varlance Sum Laws apply to the varlances not standard devlations.Answer should be in % accurate up to 2 decimal places.

According to the Law of Sum of variances, variances of two stock can be added but that of standard…

You have a portfolio of investment which consists of Stock A with a return of A% and Stock B with a return of B%. Given the following average- returns and standard deviations for both Stock A and Stock B, M(A) = 12%, M(B) = 40% S(A) = 2%, s(B) = 11% what is the absolute risk (standard deviation) of your portfolo assuming that the returns of Stock A and Stock B are uncorrelated? Hint: Notice that the return of your portfollo will be A+B and the Variance Sum Laws apply to the variances not standard deviations. Answer should be in % accurate up to 2 decimal places.

You have a portfolio of investment which consists of Stock A with a return of A% and Stock B with a return of B%. Given the following average- returns and standard deviations for both Stock A and Stock B, M(A) = 12%, M(B) = 40% S(A) = 2%, s(B) = 11% what is the absolute risk (standard deviation) of your portfolo assuming that the returns of Stock A and Stock B are uncorrelated? Hint: Notice that the return of your portfollo will be A+B and the Variance Sum Laws apply to the variances not standard deviations. Answer should be in % accurate up to 2 decimal places.

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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