What Is the Risk (Standard Deviation of Returns) on the Bank's

question 16

Multiple Choice

What is the risk (standard deviation of returns) on the bank's loan portfolio if loan returns are uncorrelated (ρ = 0) ?

• A)1.41 percent.
• B)1.63 percent.
• C)0.93 percent.
• D)3.57 percent.
• E)1.18 percent.

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Definitions:

Operating Departments

Divisions or units within an organization that are directly involved in the core operations or primary purpose of the business.

Setup Cost

The expenses incurred to get equipment ready to process a different batch of goods, distinct from the operational costs of running the equipment.

Number of Setups

A measurement in manufacturing that refers to how many times equipment is adjusted or changed to produce different products.

Maintenance Department

The section of an organization responsible for maintaining and repairing its facilities, equipment, and vehicles to ensure operational efficiency.