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Author Question: Bob has a $100,000 stock portfolio with a beta of 1.5, an expected return of 14%, and a standard ... (Read 55 times)

kmoyer2

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on: Aug 7, 2023
Bob has a $100,000 stock portfolio with a beta of 1.5, an expected return of 14%, and a standard deviation of 22%. Becky also has a $100,000 portfolio, but it has a beta of 0.9, an expected return of 8%, and a standard deviation that is also 22%. The correlation coefficient, r, between Bob’s and Becky’s portfolios is zero. If Bob and Becky marry and combine their portfolios, which statement about their combined $200,000 portfolio is true?

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The combined portfolio’s beta will be equal to a simple average of the betas of the two individual portfolios, 1.2; its expected return will be equal to a simple weighted average of the expected returns of the two individual portfolios, 11%; and its standard deviation will be less than the simple average of the two portfolios’ standard deviations, 22%.


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The combined portfolio’s expected return will be less than the simple weighted average of the expected returns of the two individual portfolios, 11%.


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The combined portfolio’s standard deviation will be equal to the simple average of the two portfolios’ standard deviations, 22%.


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The combined portfolio’s standard deviation will be greater than the simple average of the two portfolios’ standard deviations, 22%.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by kmoyer2 on Aug 7, 2023

koswald

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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kmoyer2

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Reply 2 on: Aug 7, 2023
Gracias!

covalentbond

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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