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Returns on Investment An Analysis of the Stock Market Produces the Following Information

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Returns on Investment
An analysis of the stock market produces the following information about the returns of two stocks. Returns on Investment An analysis of the stock market produces the following information about the returns of two stocks.   Assume that the returns are positively correlated with correlation coefficient of 0.80. ​ ​ -{Returns on Investment Narrative} Find the standard deviation of the return on a portfolio consisting of an equal investment in each of the two stocks. Assume that the returns are positively correlated with correlation coefficient of 0.80. ​ ​
-{Returns on Investment Narrative} Find the standard deviation of the return on a portfolio consisting of an equal investment in each of the two stocks.


Definitions:

Intersect

The point at which two or more lines or curves meet or cross each other.

Marginal Rate

Generally refers to the additional or incremental rate applied to an additional unit of some activity, such as the rate of tax applied to the next dollar of income.

Budget Constraint

Represents the limitations on the choices consumers can make, given their income and the prices of goods and services.

Indifference Curve

A curve that shows consumption bundles that give the consumer the same level of satisfaction

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