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what is the standard deviation of the market portfolio if the standard deviation of a well-diversified portfolio with a beta of 1.25 equals 20%?

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The standard deviation of the market portfolio if the standard deviation of a fully diversified portfolio with a beta of 1.25 equals 20% is option A. 16.00%

What is the Portfolio Beta?

Following the knowledge of parlance of finance, a portfolio comprises of several securities from different asset classes which includes debt an equity and series of sectors within each asset class is usually created. Such portfolio is a diversified portfolio where the overall risk is minimized without affecting the expected returns.

In order to calculate the standard deviation of the market portfolio if the standard deviation of a well-diversified portfolio with a beta of 1.25 equals 20%, divide the standard deviation by the portfolio with a beta which gives the following:

20 / 1.25 = 16. Hence, the answer.

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What is the standard deviation of the market portfolio if the standard deviation of a fully diversified portfolio with a beta of 1.25 equals 20%?

A. 16.00%

B. 18.75%

C. 25.00%

D. 32.50%

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