Please help!! I can\'t figure out b-1 or b-2 Consider the following information:
ID: 2770155 • Letter: P
Question
Please help!! I can't figure out b-1 or b-2
Consider the following information: a. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? (Round your answer to 2 decimal places, (e.g., 32.16)) Expected return 10.86 % b-1 What is the variance of this portfolio? (Do not round intermediate calculations and round your answer to 5 decimal places, (e.g., 32.16161)) Variance b-2 What is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) Standard deviation %Explanation / Answer
b
What is the variance
To calculate the standard deviation, we first need to calculate the variance. To find the variance, we find the squared deviations from the expected return. We then multiply each possible squared deviation by its probability, than add all of these up. The result is the variance. So, the variance and standard deviation of the portfolio is:
2p = 0.15*(0.048-0.1086)^2+0.60*(0.0756-0.1086)^2+0.20*(-0.009-0.1086)^2 +0.05(-000605)= 0.03170
hat is the standard deviation? (Do not round intermediate calculations and round your final answer to 2 decimal places
p = (.03170)1/2 = .1781or 17.81%