Answer:
The standard deviation of the portfolio is σ=0.56676
Step-by-step explanation:
Being
f_a: portfolio percentage of Aquaman's stocks
f_g: portfolio percentage of Green Lantern's stocks
σ_a: standard deviation of Aquaman's stocks
σ_g: standard deviation ofGreen Lantern's stocks
r: correlation coefficient
The standard deviation of the portfolio can be calculated as:
[tex]\sigma=\sqrt{f_A^2*\sigma_A^2+f_G*\sigma_G^2+2f_Af_G*Cov}\\\\\\\sigma=\sqrt{f_A^2*\sigma_A^2+f_G*\sigma_G^2+2f_Af_Gr\sigma_A\sigma_G}\\\\\\\sigma=\sqrt{0.7^2*0.7^2+0.3^2*0.8^2+2*0.7*0.3*0.1*0.7*0.8}\\\\\\\sigma=\sqrt{0.2401+0.0576+0.02352}=\sqrt{0.32122} =0.56676[/tex]
