Question: An investor puts USD 10,000 into each of four stocks, labeled A, B, C & D. The following are the means & the standard deviations of the annual returns of these four stocks. Assuming that the returns of these four stocks are independent of each other, compute the mean & the standard deviation of the total amount that this investor in 1 year from these four investments.
|
Stock
|
Mean annual return
|
Stdev. of annual return
|
|
A
|
0.13
|
0.04
|
|
B
|
0.16
|
0.06
|
|
C
|
0.12
|
0.02
|
|
D
|
0.15
|
0.05
|