The Chahad Bank wants to open a new branch in a distant city with very different economic conditions.Currently,the bank has an expected return of 15% with a standard deviation of 7%.The new branch is expected to have a return of 20% with a standard deviation of 10%.The correlation between the bank's returns and the returns from the new branch is -0.3.The new branch is expected to contribute 10% of the bank's revenues.What is the standard deviation of returns for the bank if they add the new branch? (Round your answer to the nearest 0.1%)
A)36.9%
B)6.1%
C)50.3%
D)7.1%
E)6.7%

Question

Quizplus · Accepted Answer

The Answer of The Chahad Bank wants to open a new branch in a distant city with very different economic conditions.Currently,the bank has an expected return of 15% with a standard deviation of 7%.The new branch is expected to have a return of 20% with a standard deviation of 10%.The correlation between the bank's returns and the returns from the new branch is -0.3.The new branch is expected to contribute 10% of the bank's revenues.What is the standard deviation of returns for the bank if they add the new branch? (Round your answer to the nearest 0.1%)
A)36.9%
B)6.1%
C)50.3%
D)7.1%
E)6.7%

The Chahad Bank Wants to Open a New Branch in a Distant