Consider a portfolio with $5,000, invested 60% in Black Gold Inc., an energy company, and 40% in
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Consider a portfolio with $5,000, invested 60% in Black Gold Inc., an energy company, and 40% in Bits and Bytes, an information technology firm.
Following statistics relate to these two investments:
Black Gold | Bits & Bytes | |
Return | 5% | 13% |
Standard deviation | 12% | 20% |
Correlation coefficient between returns of BG & B&B is 0.7.
Calculate the extent to which risk is reduced in this portfolio.
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Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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