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Q4. Suppose you develop a mutual fund that includes 500 NASDAQ stocks, all with equal weights...

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Q4. Suppose you develop a mutual fund that includes 500 NASDAQstocks, all with equal weights in the fund's portfolio. The averagereturn standard deviation of the stocks is 44 percent, and theaverage pairwise correlation among the stocks is 0.30. What is yourestimate of the standard deviation of the fund's portfolio?

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No of stocks in the portfolio 500 weights of all the stocks in the portfolio are equal w therefore w1 w2 w3 w500 1500 1 2 3 500 044 average standard deviation of the stocks is 044 and    See Answer
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Q4. Suppose you develop a mutual fund that includes 500 NASDAQstocks, all with equal weights in the fund's portfolio. The averagereturn standard deviation of the stocks is 44 percent, and theaverage pairwise correlation among the stocks is 0.30. What is yourestimate of the standard deviation of the fund's portfolio?

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