If the standard deviation of returns on the market is 20 percent, and the beta of a well-diversified portfolio is 1.5, calculate the standard deviation of this portfolio.
A)30 percent.
B)20 percent.
C)15 percent.
D)10 percent.

Question

Quizplus · Accepted Answer

The standard deviation of a well-diversified portfolio can be calculated as the product of the market's standard deviation and the portfolio's beta. Here, it's 20% * 1.5 = 30%.

If the Standard Deviation of Returns on the Market Is