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To illustrate this consider figure 3 which shows how

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Unformatted text preview: on the exposure to risk could be minimized, which implies that portfolio risk is less than the average of the risk of the individual stocks. To illustrate this consider Figure 3, which shows how the expected return and standard deviation change as the portfolio is comprised by different combinations of the Nokia and Nestlé stock. Figure 3: Portfolio diversification Expected Return (%) 100% in Nokia 50% in Nokia 50% in Nestlé 100% in Nestlé Please click the advert You’re full of energy and ideas. And that’s just what we are looking for. © UBS 2010. All rights reserved. Standard Deviation Looking for a career where your ideas could really make a difference? UBS’s Graduate Programme and internships are a chance for you to experience for yourself what it’s like to be part of a global team that rewards your input and believes in succeeding together. Wherever you are in your academic career, make your future a part of ours by visiting www.ubs.com/graduates. www.ubs.com/graduates Download free ebooks at bookboon.com 36 Corporate Finance...
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