Your Portfolio Consists of $50,000 Invested in Stock X and $50,000

question 16

Multiple Choice

Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock Y.Both stocks have an expected return of 15%,betas of 1.6,and standard deviations of 30%.The returns of the two stocks are independent,so the correlation coefficient between them,rXY,is zero.Which of the following statements best describes the characteristics of your 2-stock portfolio?

• A) Your portfolio has a standard deviation of 30%,and its expected return is 15%.
• B) Your portfolio has a standard deviation less than 30%,and its beta is greater than 1.6.
• C) Your portfolio has a beta equal to 1.6,and its expected return is 15%.
• D) Your portfolio has a beta greater than 1.6,and its expected return is greater than 15%.
• E) Your portfolio has a standard deviation greater than 30% and a beta equal to 1.6.

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Definitions:

Dating

A stage of romantic relationships in humans whereby two people meet socially with the aim of each assessing the other's suitability as a prospective partner.

Group Cohesion

The bond or sense of unity among members of a group, characterized by mutual support and shared goals.

Cliques

Small groups that range from 2 to about 12 individuals and average about 5 or 6 individuals. Cliques can form because of friendship or because individuals engage in similar activities, and members usually are of the same sex and about the same age.

Delinquent Behavior

Actions that violate social norms or laws, especially by young people.