You are considering investing in a portfolio that consists of three stocks, A, B, and C. The
Fantastic news! We've Found the answer you've been seeking!
Question:
You are considering investing in a portfolio that consists of three stocks, A, B, and C. The expected returns and standard deviations of the stocks are as follows:
Stock | Expected Return | Standard Deviation |
---|---|---|
A | 8% | 15% |
B | 12% | 20% |
C | 16% | 25% |
The correlation coefficients between the stocks are:
A | B | C | |
---|---|---|---|
A | 1.0 | 0.3 | 0.5 |
B | 0.3 | 1.0 | 0.2 |
C | 0.5 | 0.2 | 1.0 |
You plan to invest 40% of your portfolio in Stock A, 30% in Stock B, and 30% in Stock C. Calculate the expected return and standard deviation of your portfolio.
Related Book For
Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright
Posted Date: