Use the Figure for the Question(s) Below

question 6

Multiple Choice

Use the figure for the question(s) below

-The above screen shot from Google Finance shows the basic stock information for the Commonwealth Bank of Australia after the close of business on 12 April 2010. How many shares of CBA had been traded on the ASX on this date?

• A) 1.4 million
• B) 89 billion
• C) 1.3 billion
• D) 59 billion

Understand and calculate covariance between two securities.

Understand and calculate the correlation coefficient between two securities.

Calculate the expected return of a portfolio based on its constituents and their weights.

Understand the concept of perfectly negatively correlated securities and their impact on portfolio risk and return.

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Definitions:

Probability Density Function

A mathematical expression that represents how likely it is for a random variable to assume a specific value.

Continuous Random Variable

A random variable that can take any value within a given range, including fractions and decimals.

Positive Value

A number greater than zero.

Z

Often referred to in statistics as a standard score, it represents the number of standard deviations a data point is from the mean.