The following returns have been estimated for Security T and Security S: Scenario Security T Security S 1 20% 10% 2 13% -6% 3 15% 20% Each scenario is...

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Finance

The following returns have been estimated for Security T andSecurity S:
Scenario
Security T
Security S
1
20%
10%
2
13%
-6%
3
15%
20%
Each scenario is equally likely to occur, and you plan to invest70% in Security T and 30% in Security S. What is the standarddeviation of the rate of return of the portfolio? Round your answerto the nearest tenth of a percent.
A) 0.0%
B) 4.5%
C) 19.9%
D) 59.7%

Answer & Explanation Solved by verified expert

3.6 Ratings (505 Votes)

Weight of T Wt 70 07Weight of S Ws 30 03Scenario 1Return of T Rt 20Return of S Rs 10Hence expected return of portfolio Wt Rt Ws Rsexpected return of portfolio 07 02 03 01expected return See Answer

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Scenario	Security T	Security S
1	20%	10%
2	13%	-6%
3	15%	20%