The Stock of a Technology Company Has an Expected Return

question 27

Multiple Choice

The stock of a technology company has an expected return of 15% and a standard deviation of 20%. The stock of a pharmaceutical company has an expected return of 13% and a standard deviation of 18%. A portfolio consisting of 50% invested in each stock will have an expected return of 14 % and a standard deviation

• A) less than the average of 20% and 18%.
• B) the average of 20% and 18%.
• C) greater than the average of 20% and 18%.
• D) The answer cannot be determined with the information given.

---

Definitions:

Defect Rate

The frequency at which errors or flaws occur in a product, process, or service, typically expressed as a percentage or ratio.

Mean Number

The average value of a set of numbers, calculated by dividing the sum of all numbers by the quantity of numbers.

Batches

In manufacturing and computing, batches refer to groups of items or data processed or produced at one time, often for efficiency and tracking purposes.

Defect Rate

The frequency at which defects, flaws, or errors occur in a product, process, or system, usually expressed as a ratio or percentage of the total output.