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what is the relationship of the portfolio standard deviation to the weighted average of the standard deviation of the component assets

INSTRUCTIONS TO CANDIDATES
ANSWER ALL QUESTIONS

1.       What is the relationship of the portfolio standard deviation to the weighted average of the standard deviation of the component assets?

 

2.       Steady Growth Industries has never missed a dividend payment in its 94-year history. Does this make it more attractive to you as a possible purchase for your stock portfolio?

 

3.       If markets are efficient, what should be the correlation coefficient between stock returns for two nonoverlapping time periods?

 

4.       In forming a portfolio of two risky assets, what must be true of the correlation coefficient between their returns if there are to be gains from diversification? Explain

 

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