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What is the equation to calculate risk

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Reference no: EM132761268

If Lydia wants to ignore the risk of her investment she should invest all her money into thestock that promises the highest expected return. According to the predictions of the investment advisors the expected returns equal 20% for Bigbell, 42% for Lotsofplace, 100% for Internetlife,50% for Healthtomorrow, 46% for Quicky, and 30% for Automobile Alliance. Therefore, sheshould invest 100% of her money into Internetlife. The risk (variance) of this portfolio equals 0.333.

Portfolio Selection Problem (Savvy Stock Selection)

BB LOP ILI HEAL QUI AUA Expected

Return 20% 42% 100% 50% 46% 30%

Problem 1: What is the equation to calculate risk (variance) for these six stocks?

Reference no: EM132761268

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