The Expected Return of a Two Asset Portfolio with a Correlation

question 44

Multiple Choice

The expected return of a two asset portfolio with a correlation coefficient of .35 will be _______________ the weighted average expected return of the portfolio.

• A) below
• B) above
• C) equal to
• D) None of the options are correct

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Definitions:

Standard Machine-Hours

An accounting measure used to allocate manufacturing overhead costs to products based on the number of hours machines are expected to operate.

Variable Overhead Rate Variance

The difference between the expected (standard) cost of the variable overhead based on the actual production volume and the actual variable overhead incurred.

Standard Machine-Hours

A predetermined amount of time that a machine is expected to operate to meet production requirements.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including rent, utilities, and salaries for employees not directly involved in production.