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What is the standard deviation of the returns on a $40,000 portfolio which consists of stocks...

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Question

Finance

What is the standard deviation of the returns on a $40,000portfolio which consists of stocks C and D? Stock C is valued at$22,000.

State of

Economy

Probability of

State of Economy

Returns if State Occurs
Stock CStock D
Boom20%15%4%
Normal70%9%6%
Recession10%-2%5%

Answer & Explanation Solved by verified expert
3.9 Ratings (687 Votes)
Solution Portfolios Standard deviation 00231 in decimal 231 in Working Notes First of all We calculate weight of each stock in the portfolio Weight of Stock C in portfolio Stock C value portfolio value 2200040000 055 Weight of Stock D in portfolio 1Weight of Stock C in portfolio 1 055 045 Then    See Answer
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Transcribed Image Text

What is the standard deviation of the returns on a $40,000portfolio which consists of stocks C and D? Stock C is valued at$22,000.State ofEconomyProbability ofState of EconomyReturns if State OccursStock CStock DBoom20%15%4%Normal70%9%6%Recession10%-2%5%

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