Given the Following Information on Securities E and F, Calculate

question 107

Multiple Choice

Given the following information on securities E and F, calculate the expected return and standard deviation of returns on a portfolio consisting of 40% invested in E and 60% invested in F. $$\begin{array} { l l l } & \text { Security E } & \text { Security F } \\\text { Expected Return } & 12 \% & 15 \% \\\text { Standard Deviation of Returns } & 10 \% & 20 \% \\\text { Correlation coefficient of returns } &&{ - 0.50 }\end{array}$$

• A) 13.5%; 15%
• B) 13.8%; 14.4%
• C) 13.8%; 10.6%
• D) 13.5%; 8.7%

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Definitions:

Daily Demand

The total requirement or desire for a product or service on a daily basis.

Computers

Electronic devices designed to accept data, perform prescribed mathematical and logical operations at high speed, and display the results.

Expected Value

The sum of all possible values each multiplied by its probability of occurrence.

Binomial Distribution

A probability distribution that models the number of successes in a fixed number of independent Bernoulli trials with the same probability of success.