Your portfolio is invested 30 percent each in Stocks A and C,and 40 percent in Stock B.What is the standard deviation of your portfolio given the following information?
A)12.38 percent
B)12.64 percent
C)12.72 percent
D)12.89 percent
E)13.97 percent

Question

Your portfolio is invested 30 percent each in Stocks A and C,and 40 percent in Stock B.What is the standard deviation of your portfolio given the following information? 
A)12.38 percent 
B)12.64 percent 
C)12.72 percent 
D)12.89 percent 
E)13.97 percent

Quizplus · Accepted Answer

E(R_p)_Boom = 0.3(0.25) + 0.4(0.25) + 0.3(0.45) = 0.31E(R_p)_Good = 0.3(0.10) + 0.4(0.13) + 0.3(0.11) = 0.115E(R_p)_Poor = 0.3(0.03) + 0.4(0.05) + 0.3(0.05) = 0.044E(R_p)_Bust = 0.3(-0.04) + 0.4(-0.09) + 0.3(-0.09) = -0.075E(R_p) = 0.25(0.31) + 0.25(0.115) + 0.25(0.044) + 0.25(-0.075) = 0.0985σ_p² = 0.25(0.31 - 0.0985)² + 0.25(0.115 - 0.0985)² + 0.25(0.044 - 0.0985)² + 0.25(-0.075 - 0.0985)² = 0.019519250σ_p = √0.019519250 = 13.97 percent

Your Portfolio Is Invested 30 Percent Each in Stocks a and C,and