Use the table for the question(s)below.
Consider the following returns:
-The variance on a portfolio that is made up of equal investments in Stock X and Stock Y is closest to:
A)0.13.
B)0.10.
C)0.69.
D)0.29.

Question

Use the table for the question(s)below.
Consider the following returns: 
-The variance on a portfolio that is made up of equal investments in Stock X and Stock Y is closest to:
A)0.13. 
B)0.10. 
C)0.69. 
D)0.29.

Quizplus · Accepted Answer

The variance of a portfolio with equal investments in two stocks is calculated using the formula: Var(P) = (wX^2 * Var(X)) + (wY^2 * Var(Y)) + 2 * wX * wY * Cov(X,Y). Assuming equal weights and given variances and covariance, the calculation would result in a value closest to 0.13.

Use the Table for the Question(s)below