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Paul [167]
4 years ago
10

Consider the following case: Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock

holdings in his portfolio:Stock Percentage of Portfolio Expected Return Standard DeviationArtemis 20% 8% 38%Babish 30% 14% 42%Cornell 35% 11% 45%Danforth 15% 5% 47% What is the expected return of Andre's portfolio?Suppose each stock in the preceding portfolio has a correlation coefficient of 0.4 with each of the other stocks. The market's standard deviation is around 20%, and the weighted average of the risk of the individual securities in the partially diversified portfolio of four stocks is 35%. If 40 additional, randomly selected stocks with a correlation coefficient of 0.3 with the other stocks in the portfolio were added to the portfolio, what effect would this have on the portfolio's standard deviation?

Business
1 answer:
Arada [10]4 years ago
6 0

Answer:

answer is attached in figure below

Explanation:

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