Suppose You Develop a Mutual Fund That Includes 78 Stocks

question 11

Multiple Choice

Suppose you develop a mutual fund that includes 78 stocks, all with equal weights in the fund's portfolio.The average standard deviation of the stocks is 44%, and the average pair-wise correlation among the stocks is 0.30.What is your estimate of the standard deviation of the fund's portfolio?

• A)19.5%
• B)24.5%
• C)29.5%
• D)34.5%

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