Question: Assume the additional information provided below for the four stocks in Problem 7-2. a. Assuming equal weights for each stock, what are the standard deviations

Assume the additional information provided below for the four stocks in Problem 7-2.

*(96) A B C D A 1.0 8 0.6 1.0 C 20

a. Assuming equal weights for each stock, what are the standard deviations for the following portfolios?

A, B, and C B and C B and D C and D

b. Calculate the standard deviation for a portfolio consisting of stocks B and C, assuming the following weights: (1) 40 percent in B and 60 percent in C; (2) 40 percent in C and 60 percent in B.

c. In part a, which portfolio(s) would an investor prefer?

*(96) A B C D A 1.0 8 0.6 1.0 C 20 0.2 1.01.0 10 9 D 16 05 0.3 0.8 1.0

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