The Volatility of Woolworth's Share Price Is 30% and That

question 42

Multiple Choice

The volatility of Woolworth's share price is 30% and that of Reckon's shares is 30%. When I hold both shares in my portfolio and the returns have zero correlation, the overall volatility of returns of the portfolio is

• A) unchanged at 30%.
• B) more than 30%.
• C) less than 30%.
• D) Cannot say for sure

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Definitions:

Tax Levied

A compulsory financial charge or a type of fee imposed by a governmental organization upon individuals or entities to fund government spending and various public expenditures.

Deadweight Loss

A reduction in economic productivity that arises when a good or service does not reach or cannot reach its market equilibrium.

Administrative Burden

The administrative and regulatory obligations that organizations must follow, often involving substantial paperwork and compliance efforts.

Tax System

The structured method by which governments impose financial charges on citizens, businesses, and property to fund public expenditures.