A Portfolio Has 40% of Its Value in ASX Shares

question 56

Multiple Choice

A portfolio has 40% of its value in ASX shares and the rest in Woodside Petroleum (WPL) . The volatilities of ASX and WPL are 40% and 30%, respectively, and the correlation between ASX and WPL is -0.3. What is the standard deviation of the portfolio?

• A) 22.17%
• B) 18.65%
• C) 20.18%
• D) 19.95%

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Definitions:

Equipment

Tangible property used in operations, such as machinery or computers, that has a useful life beyond a single reporting period.

Depreciation

The process of allocating the cost of a tangible asset over its useful life.

Straight-Line Basis

An accounting method of depreciation where the value of an asset is reduced evenly over its useful life.

Salvage Value

The projection of an asset's resale value after it ceases to be of use.