Question: Problem 5.37 The estimated standard deviations and correlations for three stocks are given in the table below. Stock A B C A 0.30 1

Problem 5.37 The estimated standard deviations and correlations for three stocks are given in the table below. Stock σ A B C A 0.30 1 −0.63 0.52 B 0.20 −0.63 1 −0.60 C 0.36 0.52 −0.60 1

(a) Compute the standard deviation of a portfolio composed of 50% of B and 50% of C.

(b) Compute the standard deviation of a portfolio composed of 40% of A, 20% of B, and 40% of C.

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