Unformatted text preview: E ( ~ r 2 j ) & & r 2 {z} [ E (~ r )] 2 Standard deviation , ± = p V ar (~ r ) : Covariance and Correlation between asset A&s return and asset B&s return: Cov AB = J X j =1 (~ r A;j & & r A ) ± (~ r B;j & & r B ) ± Pr ( j ) = 2 4 J X j =1 Pr ( j ) ± ~ r A;j ± ~ r B;j 3 5 & & r A ± & r B ² AB = Cov AB ± A ± B ; Cov AB = ± A ± B ² AB ; & 1 ² ² AB ² +1 : Variance and standard deviation of a 2stock portfolio (stocks A and B), ± 2 p and ± p : ± 2 p = w 2 A ± 2 A + w 2 B ± 2 B + 2 w A w B ± A ± B ² AB  {z } Cov AB 1...
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 Spring '10
 Masoudie
 Standard Deviation, Variance, Constant dividend growth, nperiod coupon bond

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