The expected return and standard deviation of a portfolio that is 60 percent inv

Question

The expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co. are the following:

What is the standard deviation if the correlation is +1? 0? 1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

The expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co. are the following:

Explanation / Answer

3 Dorrs, Inc. Down Co. Expected return 16% 14% Standard deviation 59 30 Correlation 1 wieghts 0.6 0.4 p      =    [(0.6)(59%) + (0.4)(30%) + 2(0.6)(0.4)(1)(59%)(30%)]1/2 0.55896 SD(Correlation +1) = 75% SD(Correlation -1) = 62%

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