Question

P 12-10 (similar to) Assigned Media Question Help Using the data in the following table, and the fact that the correlation of A and B is 0 27, calculate the volatility (standard deviation) of a portfolio that is 50% invested in stock A and 50% invested in stock B. Realized Returns Stock A Stock B -7% 29% 13% 13% - 2% - 11% 28% Year 2008 2009 2010 2011 2012 2013 31% - 10% P ma za The standard deviation of the portfolio is % (Round to two decimal places) ci Enter your answer in the answer box and then click Check Answer Clear All Check Answer All parts showing UUTTARINOY TUTUTUNUDUA earch o e @ 9

Answer 1

Answer Period Return (RA) 2008 -7 2009 - 13 9 2010 2011 - 2 2012 2013 ERA= 20 DERARA (DA) RB Dp² RB-RB (PB) ² -10.333 108,7778 29 15.6667 168 245444 .6667 93.444 31 17.6667 312.1||| 0.6667 0.444 13 -0.3333 0.1111 – 5.333 98444 -10 ~ 23.333 544.444 0.6667 0.4444 -11 – 24.333 592.1111 4.6667 21.7778 28 14.6667 215111 {02-251.333 580 E08 1909.33 ERB Average Return of Stock A = RAZER 3.33 Average Retorn of Stock B = RB 2 SRB - 80 - 13.33

Std. deviation StockA - JA 2 51.333 6.4721 Stock B = UB= 1909.333 17.8387 U2 0.27 Correlation Coefficient ie. (A,B) = weight of Stock A = WA = 0.50 " 1 Stock B = WB = 0.50 Stondord deviation of Portfolio I WA & wohoo & 2 WAWBOAOB T (A,B) 0.5}(6.4721 + (os) (17.8387) + 2(0.53 (6 4721) (17.8387) × 0,27 J105,6131 10.2768