-Based on Exhibit T19.1, what is the standard deviation of an equal-weighted portfolio of Canadian and French equities?

Question

Quizplus · Accepted Answer

The standard deviation of an equal-weighted portfolio is the weighted average of the standard deviations of the individual assets, where the weights are the proportions of the assets in the portfolio. In this case, the portfolio is equally weighted, so the standard deviation of the portfolio is the average of the standard deviations of Canadian and French equities. The standard deviation of Canadian equities is 17.4% and the standard deviation of French equities is 24.1%, so the standard deviation of the portfolio is (17.4% + 24.1%) / 2 = 20.7%.