Stock X Has a Standard Deviation of Return of 10

question 32

Multiple Choice

Stock X has a standard deviation of return of 10%. Stock Y has a standard deviation of return of 20%. The correlation coefficient between stocks is 0.5. If you invest 60% of the funds in stock X and 40% in stock Y, what is the standard deviation of a portfolio?

• A) 10%
• B) 20%
• C) 12.2%
• D) None of the above

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Definitions:

Cash Payment

Cash payment refers to transactions where the payment for goods or services is made immediately using physical currency or through electronic means that represent immediate funds transfer.

Merchandise Return

Occurs when a customer returns a product to the seller for a refund or exchange due to dissatisfaction or defects.

Perpetual Inventory System

An inventory management system that tracks the sale and restock of inventory items in real-time.

Merchandise

Products that are purchased, stored, and sold by businesses, typically in the retail industry.