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Unformatted text preview: 24%. You put the rest of you money in a risky bond portfolio that
has an expected return of 6% and a standard deviation of 12%. The stock and bond
portfolio have a correlation 0.55. The expected return of the resulting portfolio will be
________% and the standard deviation _______%.
E(r)=0.5(14%)+0.5(6%)=10%
σ2p = 0.02592 = (.52)(.242) + (.52)(.122) + 2(.5)(.5)(.24)(.12)0.55; σ = 16.099%
4. The standard deviation of return on investment A is .10 while the standard deviation of
return on investmen...
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 Spring '13

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