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Take a Test Oshayne Whittingham -Google Chrome Secure l https://www.mathxl.com/Student/PlayerTest.aspx?testld-172873572&centenreyes; Principles of Business Finame Test:Exam 2 Time Remaining: 02.41:52 Submit Test This Question: 1 pt 380141 (7 complete ) This Test: 41 pts possible The expected return on VZ next year is 12% with a standard deviation of 20% The expected return on ANT next year is 24% with a standard deviation of 30% The correlation between the two stocks is 6 " Emily makes equal investments in VZ and AT what is the standard deviation of her portfiolio? A. 5.05% B. 22 47% °C, 1500% D. 2500%

Explanation / Answer

variance = (0.5*0.2)2 + (0.5*0.3)2 + 2*0.5*0.5*0.2*0.3*0.6

variance = 0.0505

standard dev = square root of variance = 22.47%

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