Suppose you have the following data on two risky assets: You plan to put 60% of your wealth in asset 1 and 40% of your wealth in asset 2.
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Suppose you have the following data on two risky assets: />You plan to put 60% of your wealth in asset 1 and 40% of your wealth in asset 2. Calculate the mean and the standard deviation of the resulting portfolio for values of the correlation equal to -1, 0, 0.2, 0.5 and 1. What is the maximum value of the standard deviation of the portfolio, and why? ATTACHMENT PREVIEW Download attachment fin3.PNG

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Mean = 14.2% Correlation(r) SD of portfolio -1 10.2% 0 15.75% 0.2 16.64% 0.5 17.89% 1 19.8%... View the full answer

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