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The Example you are mentioning on page no 155
I’m unble to find it there!
Thanks for clarifying on covariance.
What is the correct answer 7.33% or 2.71% for current +A?
@odette123, 7.33% (you can check the answers at the back of the course notes)
I had a problem, I know that the best thing to do was to work the question out however just looking at the options. A has a return of 8% and risk of 5% while B provide the same return for a lower risk and also has a positive correlation with Janis current protfolio.
Could i have use that to eliminate A immediate/
@odette123, No you cannot eliminate A immediately. Because there is positive correlation, it could mean that the total risk ended up higher. The only way you can check for certain is by calculating the total risk for both alternatives.
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