Asset | Boom (prob. = 0.4) | Normal Economy (prob. = 0.4) | Recession (prob. = 0.2) |
Stock A | 20% | 8% | -8% |
Stock B | 8% | 4% | 2% |
You plan to construct your portfolio based on the stock A and B. You decide to invest 60% of your wealth in stock A and 40% of your wealth in stock B. Please calculate the standard deviation of your portfolio according to the probability of each scenario.
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