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A Stock Portfolio Consists of Two Stocks X and Y

Question 26

Multiple Choice

A stock portfolio consists of two stocks X and Y. Their daily closing prices are correlated random variables with variances σX2 = 3.51 and σY2 = 5.22, and covariance σXY = -1.55. What is the standard deviation of the sum of the closing prices of these two stocks?


A) 5.63
B) 7.18
C) 8.73
D) 2.68

Correct Answer:

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