Stocks a and B Each Have an Expected Return of 12%,a

question 147

Multiple Choice

Stocks A and B each have an expected return of 12%,a beta of 1.2,and a standard deviation of 25%.The returns on the two stocks have a correlation of +0.6.Portfolio P has 50% in Stock A and 50% in Stock B.Which of the following statements is CORRECT?

• A) Portfolio P has a beta that is greater than 1.2.
• B) Portfolio P has a standard deviation that is greater than 25%.
• C) Portfolio P has an expected return that is less than 12%.
• D) Portfolio P has a standard deviation that is less than 25%.
• E) Portfolio P has a beta that is less than 1.2.

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Definitions:

Responsibilities

Duties or obligations assigned to individuals or organizations, requiring them to act in certain ways or achieve specific outcomes.

Electronic Funds Transfer

The electronic exchange or transfer of money from one account to another, either within the same financial institution or across different institutions, through computer-based systems.

Bank Deposits

Money placed into a banking institution for safekeeping, which can include savings accounts, checking accounts, and certificates of deposit.

Petty Cash Management

The process of overseeing and controlling the petty cash fund, a small amount of cash on hand used for minor expenses.