Portfolio volatility assuming the stocks are uncorrelated

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1. An individual stock has an annualized volatility of 60%. Consider a portfolio of 10 equal weighted positions. The correlation between any pair of assets (two different stocks) is 0.7. What is the risk of the portfolio?

2. An individual stock has an annualized volatility of. Consider a portfolio of G equally weighted positions.

a. What is the formula for the portfolio volatility assuming the stocks are uncorrelated? (look at the notes)

b. What is the formula for the portfolio volatility assuming each pair of unique stocks have a positive correlation of

c. What happens to this formula as G  +??

Reference no: EM132054557

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