Consider a 2 asset portfolio with 60% in Google Inc.(GOOG)and 40% in John Deere (DE).Google has a standard deviation of 60%,John Deere has a standard deviation of 45% and their correlation is 0.2.What is the standard deviation of returns of the portfolio?
A) 38.33%
B) 43.35%
C) 45.25%
D) 50.00%
E) 52.50%

Question

Quizplus · Accepted Answer

From the text we know the equation for the standard deviation of a 2 asset portfolio is: σ_p = 11ea7fdb_fc06_7bef_a768_8b3b54a500b5_TB2902_11 σ_p = 11ea7fdb_fc06_7bf0_a768_0fc01aa0c2b1_TB2902_11 σ_p = 11ea7fdb_fc06_7bf1_a768_ab18f007eac0_TB2902_11 σ_p = 11ea7fdb_fc06_7bf2_a768_6b88e17242a4_TB2902_11 = _{0.4335 or 43.35%}

Consider a 2 Asset Portfolio with 60% in Google Inc