× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
5
o
5
4
m
4
b
4
x
4
a
4
l
4
t
4
S
4
m
3
s
3
New Topic  
Memphic Memphic
wrote...
Posts: 728
Rep: 0 0
6 years ago
Consider a portfolio that consists of an equal investment in 20 firms. For each of these firms, there is a 70% probability that the firms will have a 16% return and a 30% that they will have a -8% return. Each of these firms' returns is independent of all others. The standard deviation of this portfolio is closest to:
A) 2.5%
B) 4.2%
C) 8.8%
D) 11.0%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 47 times
1 Reply

Related Topics

Replies
wrote...
6 years ago
A
Explanation:  A) E[return] = (.70)(16%) + (.30)(-8%) = 8.8%
SD(Rt) =   = 10.9982%
SD(Rportfolio) =   = 2.459268%
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  956 People Browsing
Related Images
  
 305
  
 94
  
 677
Your Opinion
Which of the following is the best resource to supplement your studies:
Votes: 249