The standard deviation of returns on i

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Hyacinth Macaw invests 54% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 15%, and on J it is 28%.

a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1.0. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)

Portfolio variance

b. Calculate the variance of portfolio returns, assuming the correlation is 0.4. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)

Portfolio variance

c. Calculate the variance of portfolio returns, assuming the correlation is 0. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)

Reference no: EM13305255

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