Suppose you have two portfolios of two assets each. Portfolio A has a standard deviation of...
Suppose you have two portfolios of two assets each. Portfolio A has a standard deviation of 0.35 and Portfolio B has a standard deviation of 0.15. Which portfolio most likely has a bigger difference between the ending value and the FV @ arithmetic average?
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Solution :-
Portfolio A has a bigger difference between the ending value and the FV @ arithmetic average as it has a high standard deviation , Standard Deviation means risk in a stock . The Stock which has more or large fluctuations that stock has large standard deviation. So here we see portfolio A has large standad Deviation so it means it has more or large fluctuations then as large as fluctuations as more as it create a difference between the ending value and the FV @ arithmetic average
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