Exhibit 7B $\sigma$ ₁)² - R_{1 $\sigma$ 1) E $\sigma$ 2)] - [E $\sigma$}

question 39

Multiple Choice

Exhibit 7B.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The general equation for the weight of the first security to achieve the minimum variance (in a two stock portfolio) is given by:
W₁ = [E( $\sigma$ ₁) ² - r_1.2 E( $\sigma$ ₁) E( $\sigma$ ₂) ] - [E( $\sigma$ ₁) ² + E( $\sigma$ ₂) ² - 2 r_1.2 E( $\sigma$ ₁) E( $\sigma$ ₂) ]
-Refer to Exhibit 7B.1. What is the value of W₁ when r_1.2 = -1 and E( $\sigma$ ₁) = .10 and E( $\sigma$ ₂) = .12?

• A)45.46%
• B)50.00%
• C)59.45%
• D)54.55%
• E)74.55%

---

Definitions:

Repression

A defense mechanism where unwanted thoughts and feelings are unconsciously excluded from consciousness.

Contemporary

Belonging to or occurring in the present or recent times, often used to describe current trends or ideas.

Memory Researchers

Individuals or scientists dedicated to studying how memory works, including how information is encoded, stored, and retrieved.

Rarely

Occurring not often or infrequently.