Question: Q1 : Using the data in the following? table, and the fact that the correlation of A and B is 0.64?, calculate the volatility?(standard deviation)

Q1: Using the data in the following? table, and the fact that the correlation of A and B is 0.64?, calculate the volatility?(standard deviation) of a portfolio that is 50% invested in stock A and 50% invested in stock B.

Realized Returns

Year

Stock A

Stock B

2008

?1?%

23?%

2009

17?%

39?%

2010

22?%

14?%

2011

?1?%

?2?%

2012

33?%

?12?%

2013

55?%

19?%

> The standard deviation of the portfolio is?

Q2: Using the data in the following? table, and the fact that the correlation of A and B is 0.48?, calculate the volatility? (standard deviation) of a portfolio that is 70% invested in stock A and 30% invested in stock B.

Realized Returns

Year

Stock A

Stock B

2008

?10?%

21?%

2009

20?%

30?%

2010

55?%

77?%

2011

?5?%

?3?%

2012

22?%

?8?%

2013

99?%

25?%

The standard deviation of the portfolio is?

Q3: You have ?$56,000. You put 19?% of your money in a stock with an expected return of 12?%, ?$40,000 in a stock with an expected return of 16?%, and the rest in a stock with an expected return of 18?%. What is the expected return of your? portfolio?

The expected return of your portfolio is____%

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