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 Lowes and IBM stock is closest to:
A) 0.62
B) 0.05
C) 0.12
D) 0.06

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 Lowes and IBM stock is closest to:
A) 0.62 
B) 0.05 
C) 0.12 
D) 0.06

Quizplus · Accepted Answer

D) 11ea7e5a_6e64_fdc0_9a0a_3dcc1c944326_TB1623_00 Var(R_p) = x₁²^Var(R₁) + x₂²^Var(R₂) + 2X₁X₂Cov(R₁,R₂) = (.50)²(0.125447467) + (.50)²(0.032239975 + 2(.5)(.5)(0.045469287) = 0.062156504

Use the Table for the Question(s) Below