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

question 80

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 a standard deviation that is less than 25%.
• D)Portfolio P has a beta that is less than 1.2.

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Definitions:

Permanent Colonies

Historically established settlements in new territories that were maintained over long periods, often for economic and strategic reasons.

Catholicism

The branch of Christianity headed by the Pope, based in the Vatican City; includes doctrines and practices followed by Catholics worldwide.

Colonization

The process by which a central power dominates the surrounding land and its components.

Roanoke

Often referred to as the "Lost Colony," it was an early English settlement in North America that mysteriously disappeared.