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a stock portfolio consists of 19 of stock x and 30 of stock Y. In one...

a stock portfolio consists of 19 of stock x and 30 of stock Y. In one year from now, stock x had an expected value of 21 and a variance of 70 while stock y has an expected value of 41and a variance of 24.The two stocks are in different sectors and the covariance between their prices is 0.15. what is the variance of the value of the portfolio one year from now? Round to two decimal places

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Answer #1

Let X,Y respectively be the value of stocks x and y, one year from now.

The variance of stock X is

The variance of stock Y is

The covariance between X,Y is

The stock portfolio consists of 19 of stock x and 30 of stock Y.

The value of the portfolio is

The variance of P is

ans: The variance of the value of the portfolio one year from now is 47041

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