Christy Is Considering Investing in the Common Stock of One

question 18

Multiple Choice

Christy is considering investing in the common stock of One Liberty and Heico. The following data are available for these two securities: $$\begin{array} { l l l } & \text { One Liberty } & \text { Heico } \\\text { Expected return } & 0.12 & 0.16 \\\text { Standard deviation of returns } & 0.08 & 0.20\end{array}$$ If she invests 30% of her funds in Heico and 70% in One Liberty, and if the correlation of returns between these securities is +0.65, what is the portfolio's expected return and standard deviation?

• A) 14% and 15.67%
• B) 14.8% and 9.44%
• C) 13.2% and 10.54%
• D) 13.1% and 9.67%

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Definitions:

Justice

The principle of fairness and moral rightness in the enforcement of laws and the administration of public affairs.

Chancellor

Historically, a senior state or legal official. In some jurisdictions, it refers to a judge in a court of chancery or equity.

Administrator

A person appointed by a court to manage and distribute the estate of a deceased person without a will.

Dissenting Opinion

A rephrased definition: An alternative opinion issued by a judge who disagrees with the majority's conclusion in a legal case.