Florida Company (FC)and Minnesota Company (MC)are both service companies.Their stock returns for the past three years were: FC: -5%,15%,20%; MC: 8%,8%,20%.What is the standard deviation of a portfolio with 50% of the funds invested in FC and 50% in MC?

Question

Quizplus · Accepted Answer

The standard deviation of a portfolio is calculated using the weighted average of the variances and covariances of the individual assets. Given the returns, the standard deviation of the portfolio with equal investment in FC and MC is approximately 9.3%.

Florida Company (FC)and Minnesota Company (MC)are Both Service Companies