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:

Produced Units

The quantity of items manufactured during a specific period, reflecting the output of a production process.

Direct Manufacturing Cost

The sum of all costs directly involved in the production of a product, including direct labor and materials, but excluding indirect expenses.

Produced Units

The total quantity of completed goods produced by a company over a given time frame.

Indirect Manufacturing Cost

Expenses related to production that are not directly tied to a specific product, such as maintenance and utilities.