Reference no: EM1373181
Two securities, Security A and Security B, with standard deviation of 30% and 40 percent, respectively. Compute the standard deviation of a portfolio weighted equally between two securitites if their correlation is:
1. 0.9
2. 0.0
3. -0.9
And Henry's portfolio is composed of three securities with the following characteristics:
Security A with Beta 1.20, Standard Deviation random error term of 5 percent, proportion .30
Security B with beta 1.05, Standard Deviation random error term of 8 percent, proportion .50
Security C with beta .90, Standard Deviation random error term of 2 percent, proportion .20
If standard deviation of the market index is 18 percent, find the total risk of the portfolio?
How do you get the answers, what are the calculations?
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