jim8z3

kh.asif Wrote:
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> I think in most of these questions we dont need to
> calculate anything. There is a similar question
> (which is much bigger).
>
> The answer without doing the calculation should be
> A. My trick is to multiply the weights with the
> corresponding standard deviations.
>
> (0.4*14)+(0.6*18)=16.4% (this is the standard
> deviation if the assets were perfectly positively
> correlated r=+1)
>
> since in this case the correlated=+0.6<+1, there
> would be diversification benefits and portfolio
> risk would be less than 16.4%.


So you're saying that since the correlation is less than 1, the portfolio standard deviation must be less than the weighted average of 16.4%, so you think the answer is A?