If the client in question 13 changes the asset allocation to 60% in the fund, what is the portfolio's standard deviation?

Name: If the client in question 13 changes the asset allocation to 60% in the fund, what is the portfolio's standard deviation?
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Question

Quizplus · Accepted Answer

Assuming the fund and the asset outside the fund have uncorrelated returns, the overall portfolio standard deviation would be:
sqrt[(0.6 x 18%)^2 + (0.4 x 12%)^2] = 0.18 or 18%.
Therefore, the best choice is C.

If the Client in Question 13 Changes the Asset Allocation