1. If a portfolio has a positive investment in every asset, can the standard deviation on the portfolio be less than that on every asset in the portfolio? What about the portfolio bet?
2. You buy an 8 percent, 30-year, $1,000 par value floating rate bond in 1999. By the year 2014, rates on bonds of similar risk are up to 10 percent.
What is your one best guess as to the value of the bond?