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Graph of Standard Deviation with Correlation Coefficient

Question

Consider two stocks: ABC and XYZ with the following information

 

ABC

XYZ

Mean Return

8%

20%

Standard Deviation

10%

35%

 

Draw the efficient frontier of portfolios if (a) the correlation coefficient is 0.4, and (b) -.3. These will be two different graphs.

What are the composition and the standard deviation of the minimum-variance portfolio under (a) and (b) above?

Summary

This question belongs to finance and discusses about drawing graph for efficient frontier of portfolio.

Word count: NA

 

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Comments

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    Giuseppe

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