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You are given the year-on-year expected return on two stocks, TechCo and RetailCo, which are 4.2% and 1.8% respectively and their corresponding annualized standard deviations are 12.5% and 15%.

You construct a 2-asset portfolio, containing 32% of TechCo and 68% of RetailCo and you calculated that the correlation coefficient between the two stocks is -25%. A more conservative portfolio manager, Tim, then chooses to invest 70% in your portfolio and 30% in a risk-free security. Calculate the standard deviation of Tim’s portfolio.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92094234

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