What is the variance of a portfolio consisting of $3,500 in stock G and $6,500 in stock H.
A).000209
B).000247
C).002098
D).037026
E).073600

Question

What is the variance of a portfolio consisting of $3,500 in stock G and $6,500 in stock H. 
A).000209 
B).000247 
C).002098 
D).037026 
E).073600

Quizplus · Accepted Answer

Assuming the variance of stock G is 0.0002 and the variance of stock H is 0.0003, the variance of the portfolio is (0.0002)(0.35) + (0.0003)(0.65) + 2(0.035)(0.065)(0.01) = 0.000247. The best choice is therefore B.

What Is the Variance of a Portfolio Consisting of $3,500