Ask Question
BusinessBusiness
18 May, 15:02

Assume that the standard deviation of the U. S. market portfolio is 18.2%, the standard deviation of the world portfolio is 17.1%, and the correlation between the U. S. and nonU. S. market portfolios is. 47. Suppose you invest 25% of your money in the U. S. stock market and the other 75% in the nonU. S. portfolio. What is the standard deviation of your portfolio?

+4
Answers (1)
  1. 18 May, 15:08
    0
    15.5%

    Explanation:

    The computation of the standard deviation of your portfolio is shown below:

    Standard deviation of portfolio = weight of US Market portfolio ^2 * Standard deviation of US Market portfolio ^2 + weight of Non US Market portfolio^ 2 * Standard deviation of Non US Market portfolio^2 + 2 * weight of US Market portfolio * weight of Non US Market portfolio * Standard deviation of US Market portfolio * Standard deviation of Non US Market portfolio * correlation

    = [0.25^2 * 18.2^2 + 0.75^2 * 17.1^ 2 + 2 * 0.25 * 0.75 * 18.2 * 17.1 * 0.47]

    = (0.0625 * 331.24 + 0.5625 * 292.41 + 54.852525

    = 20.7025 + 164.480625 + 54.852525

    = 240.03565

    Now take the square root of 240.03565 i. e 15.5%

    We simply applied the above formula
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Assume that the standard deviation of the U. S. market portfolio is 18.2%, the standard deviation of the world portfolio is 17.1%, and the ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
CraftMaster Corporation purchased a machine 7 years ago for $339,000 when it launched product X05K. Unfortunately, this machine has broken down and cannot be repaired.
Answers (1)
AlphaBrona Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $ 80,000 Direct labor 100,000 Variable overhead 30,000 Fixed overhead 60,000 Total $270,000 An
Answers (1)
Someone may choose to own a car instead of leasing becase AThe car can be resold later to make some money back. BThe car can be resold later for a higher price. CThe maintenance costs for a leased car are generally higher.
Answers (1)
What does double taxation mean? Sole proprietorships and partnerships pay both personal income taxes and business income taxes. For-profit businesses must pay both income taxes and property taxes.
Answers (2)
Which of the following describes the stage in the economic cycle that follows growth?
Answers (1)
New Questions in Business
What term refers to a set amount of money kept in the cash register to make change with? A. Excess cash B. Standard cash stock C. Cash drop D. Cash float
Answers (1)
Torres travel's stockholders' equity at the beginning of march 2014 was $200,000. during the month, the company earned net income of $50,000 and paid dividends of $10,000. at the end of march 2014, what is the amount of stockholders' equity?
Answers (1)
In the Keynesian model, it is assumed that, when demand for a firm's product changes, the firm: A. changes prices to meet the demand. B. changes production levels to meet the demand. C. changes prices and production levels to meet demand. D.
Answers (1)
If you purchased a camera in Britain for 100 pounds what would be the price in U. S. dollars if one pound is worth 1.40? A:71 B:100 C:140 D:1400
Answers (1)
Gontier corporation stock currently sells for $64.18 per share. the market requires a return of 12 percent on the firm's stock. required: if the company maintains a constant 5.
Answers (1)
Home » Business » Assume that the standard deviation of the U. S. market portfolio is 18.2%, the standard deviation of the world portfolio is 17.1%, and the correlation between the U. S. and nonU. S. market portfolios is. 47.
Sign Up Forgot Password?