Calculate the weights (for stocks A & B) that will create a portfolio with standard deviation of 16%
I need to know how to set up two equations for two unknowns,based on the equation for a portfolio standard deviation.
My algebra is rusty. I need to know how to rearrange the problem to solve for a, then b=(1-a),
I’ve calculated the standard deviations for both stocks individually, but again I don’t remember how to rearrange the equation to solve for the weights of the stocks.
Calculate the weights (For stocks A&B) that will create a portfolio with standard deviation 16%. The correlation coefficient is, Pab= -1 (Hint: setup two equations for two unknowns)…
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