The Standard Deviation of a Two-Asset Portfolio (With a Risky

question 13

Multiple Choice

The standard deviation of a two-asset portfolio (with a risky and a non-risky asset) is equal to:

• A) the fraction invested in the risky asset times the standard deviation of the non-risky asset.
• B) the fraction invested in the non-risky asset times the standard deviation of the risky asset.
• C) the fraction invested in the risky asset times the standard deviation of that asset.
• D) the fraction invested in the non-risky asset times the standard deviation of that asset.

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing net income before interest and taxes to its interest expenses.

Depreciation Expense

The allocation of an asset's cost over its useful life, reflecting the decrease in value over time due to wear and tear or obsolescence.

Accounts Receivable

Money owed by customers to a company for goods or services that have been delivered but not yet paid for.

Inventory Turnover

A financial metric measuring the rate at which a company sells and replaces its stock of goods during a given period.