Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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QUESTION 1
You invest 50% of your money in IBM stock and 50% of your money in
Microsoft stock. The volatilities of returns on IBM and Microsoft stocks
are 8% and 12%, respectively. If the correlation between IBM and
Microsoft's stock returns is 0.7, what is the volatility of return on your
investment?
9.25%
7.21%
6.98%
8.99%
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Transcribed Image Text:QUESTION 1 You invest 50% of your money in IBM stock and 50% of your money in Microsoft stock. The volatilities of returns on IBM and Microsoft stocks are 8% and 12%, respectively. If the correlation between IBM and Microsoft's stock returns is 0.7, what is the volatility of return on your investment? 9.25% 7.21% 6.98% 8.99%
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