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Portfolio of two stocks A and B: w_A 0.6, σ_A 18%, w_B 0.4, σ_B 22%, ρ_AB = 1. Portfolio σ is:
A19.6%
B20.0%
C19.0%
D18.4%
Answer & Solution
Correct answer: A. 19.6%
1. Identify what the question asks: this concept maps to perfectpositivecorr (§4.4.3.1).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (A).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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