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What bank variance after investing in new branch would be

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Problem 1: Expected return of the assets of a bank = 10% & standard deviation = 3%. Expected return of a proposed branch = 15% & standard deviation = 3%. New branch represents 25% of the total asset of the bank and earnings of the branch is negatively correlated with the bank which is - 0.40. 40. The bank's variance after investing in new branch would be -

Option 1: 2.07%

Option 2: 4.28%

Option 3: 3%

Option 4: None of the above

Reference no: EM132796149

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