An Investment Firm Is Considering a Portfolio with Equal Weighting

question 19

Multiple Choice

An investment firm is considering a portfolio with equal weighting in a cyclical stock and a countercyclical stock. It is expected that there will be three economic states; Good, Average and Bad, each with equal probabilities of occurrence. The cyclical stock is expected to have returns of 12%, 5% and 1% in Good, Average and Bad economies respectively. The countercyclical stock is expected to have returns of -8%, 2% and 14% in Good, Average and Bad economies respectively. Given this information, calculate portfolio standard deviation.

• A) 7.33%
• B) 6.33%
• C) 5.33%
• D) 4.33%
• E) 3.33%

Comprehend when risk of loss passes in various scenarios involving goods under a contract.

Identify the conditions under which goods are considered fungible.

Recognize the implications of F.O.B. terms in sales contracts on risk of loss and transportation costs.

Distinguish between the different titles to goods and their legal implications.

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