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You portfolio with 40% invested in Stock X and 60% invested in Stock Y. Stock X…

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Wize University Introduction to Finance Textbook > Risk, Return & Portfolio Theory

Portfolio Standard Deviation (Special Cases)

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You portfolio with 40% invested in Stock X and 60% invested in Stock Y. Stock X has an expected return of 12% and standard deviation of 8.6%. Stock Y has an expected return of 6% and standard deviation of 4%. What is the standard deviation of the portfolio if the correlation coefficient between Stocks X and Y is -1?
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More Portfolio Standard Deviation (Special Cases) Questions:
Which of the following statements is correct?
You've constructed a portfolio with Stocks A and B. Stock A has an expected return of 14% and standard deviation of 8%. Stock B has an expected return of 15% and standard deviation of 14%. The portfolio's standard deviation is 19.5%. The correlation coefficient between the two stocks is 1 (they are perfectly positively correlated).
What fraction of your money is invested in Stock B?
You portfolio with 40% invested in Stock X and 60% invested in Stock Y. Stock X has an expected return of 12% and standard deviation of 8.4%. Stock Y has an expected return of 6% and standard deviation of 4%. What is the standard deviation of the portfolio if the correlation coefficient between Stocks X and Y is 0?
You portfolio with 40% invested in Stock X and 60% invested in Stock Y. Stock X has an expected return of 12% and standard deviation of 8.6%. Stock Y has an expected return of 6% and standard deviation of 4%. What is the standard deviation of the portfolio if the correlation coefficient between Stocks X and Y is 1?
A $15,000 portfolio with a standard deviation of 14.4% is comprised of two stocks, Stock A and Stock B. The stocks are perfectly positively correlted. The expected return and standard deviation of Stock A are 12% and 10.5%. For Stock B they are 15% and 12%. How much money is invested in Stock B?