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You have purchased five shares of stock in Diversified Machine Tools which has a mean value of $25 and a standard deviation of $9, and 10 shares in Northwest Foods, Inc. which has a mean value of $40 and a standard deviation of $11. The correlation between the two stock prices is -0.40.

a. Calculate the expected value of your portfolio.

b. Calculate the expected standard deviation of your portfolio.

c. What would be the difference in the expected standard deviation of your portfolio if the prices of the two stocks were independent?

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M9751972

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