Robin holds a two-stock portfolio. Stock AA has a standard deviation of return of 0.6 and BB has a standard deviation of 0.4. The correlation coefficient of the two stock return is 0.25. Robin holds equal amount of two stocks. What would be the risk if Robin holds

i. 60% of AA and 40% of BB

ii. 70% of AA and 30% of BB

Which composition is best suited to investment based on the risk level?

Answer rating: 100% (QA)

Sure I can help you with that We can calculate the portfolio standard deviation for each composition ... View the full answer