# Port Mgmt Question

Expected Stand Deviation - x- 5% Y-4% Cov = .75 Weights x 60% Y 40% What is expected standaed devation of port - Answer is 4.30% - I am getting 6%…

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Anyone???

Variance =( .6^2 * 5^2 )+ (.4^2 * 4^2) + 2(.6)(.4)(5)(4)(.75) = (9) + (2.56) + (7.2) = 18.76 Standard Deviation = Sqrt(18.76) = 4.33

An analyst gathered the following information about a common stock: Probabilit…Possible Rate of Return 0.35…8% 0.3…10% 0.25…15% 0.1…20% The expected return and expected standard deviation of returns, respectively, for the common stock are closest to: A. 12% and 3.9%. B. 12% and 15.3%. C. 14% and 3.9%. D. 14% and 15.3%. Not getting the Standard deviation…anser is A

Variance =( .6^2 * 5^2 )+ (.4^2 * 4^2) + 2(.6)(.4)(5)(4)(.75) = (9) + (2.56) + (7.2) = 18.76 Standard Deviation = Sqrt(18.76) = 4.33 For questions 1 - for Standard Dev - do u take 5 or .05 ---- 4 or 0.04 and raise it to 2??. .6^2*5^2 = 9 ??? I am CONFUSED NOW !!

Sorry, got it !!! Don’t know what was I thinking…