Use the Table for the Question(s) Below -The Volatility of a Portfolio That Is Equally Invested in Expected

question 79

Multiple Choice

Use the table for the question(s) below.
Consider the following expected returns, volatilities, and correlations:
$\begin{array}{lccccc}\hline&\text { Expected }&\text {Standard }&\text {Correlation with }&\text {Correlation with }&\text {Correlation with }\\\text { Stock } & \text { Return } & \text { Deviation } & \text { Data\#3 } & \text { Metcash } & \text { Webjet } \\\hline \text { Data\#3 } & 14 \% & 6 \% & 1.0 & -1.0 & 0.0 \\\hline \text { Metcash } & 44 \% & 24 \% & -1.0 & 1.0 & 0.7 \\\hline \text { Webjet } & 23 \% & 14 \% & 0.0 & 0.7 & 1.0\end{array}$
-The volatility of a portfolio that is equally invested in Webjet and Data#3 is closest to?

• A) 0.6%
• B) 5.0%
• C) 7.6%
• D) 22.4%

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Definitions:

Canada Revenue Agency

The federal agency responsible for administering tax laws for the Canadian government and for most provinces and territories.

Accumulated Depreciation

The total amount of depreciation that has been recorded against a fixed asset over its useful life, reducing its book value.

Loss of $1,000

A financial term indicating that an entity has incurred a negative financial result, specifically being $1,000 less than initially accounted for or expected.

Impairment Loss

A reduction in the book value of an asset when its fair market value falls below its carrying amount on the balance sheet, indicating a permanent decline in value.