Stocks a and B Each Have an Expected Return of 15%,a

question 95

Multiple Choice

Stocks A and B each have an expected return of 15%,a standard deviation of 20%,and a beta of 1.2.The returns on the two stocks have a correlation coefficient of +0.6.You have a portfolio that consists of 50% A and 50% B.Which of the following statements is CORRECT?

• A) The portfolio's beta is less than 1.2.
• B) The portfolio's expected return is 15%.
• C) The portfolio's standard deviation is greater than 20%.
• D) The portfolio's beta is greater than 1.2.
• E) The portfolio's standard deviation is 20%.

Apply the concept of traceable fixed expenses and common fixed expenses in segment analysis.

Calculate segment margin for business segments.

Understand and apply the concept of break-even sales in segment analysis.

Analyze the effects of changes in operational activities on absorption costing net operating income.

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Definitions:

Bankruptcy Law

A legal framework governing the process through which individuals or entities who cannot repay debts to creditors may seek relief from some or all of their debts.

Debtors

Parties that are in debt to someone else.

Creditors' Claims

The rights or assertions by creditors to receive payment or compensation from a debtor's estate.

Chapter 7

A provision of the U.S. Bankruptcy Code that deals with liquidation, the process of selling a debtor's non-exempt property to pay off creditors.