Portfolio of two stocks has smallest possible volatility

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Reference no: EM131517704

Suppose Tex stock has a volatility of 44 % and Mex stock has a volatility of 20 %. If Tex and Mex are uncorrelated,

a. Construct a portfolio with positive weights in both stocks and that has the same volatility as MEX alone.

The portfolio of the two stocks that has the same volatility as Mex alone consists of % of Tex stock and % of Mex stock. (Round to one decimal place.)

b. What portfolio of the two stocks has the smallest possible volatility?

Reference no: EM131517704

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