What Is the Standard Deviation of a Portfolio Which Is

question 15

Multiple Choice

What is the standard deviation of a portfolio which is invested 20% in share A, 30% in share B and 50% in share C?
$\begin{array} { | l | l | l | l | l | } \hline & & \multicolumn{3}{|l|} { \text { Returns if State Occurs } } \\\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { Share A } & \text { Share B } & \text { Share C } \\\hline \text { Boom } & 10 \% & 15 \% & 10 \% & 5 \% \\\hline \text { Normal } & 70 \% & 9 \% & 6 \% & 7 \% \\\hline \text { Recession } & 20 \% & 14 \% & 2 \% & 8 \% \\\hline\end{array}$

• A)0.6%
• B)0.9%
• C)1.8%
• D)2.2%
• E)4.9%

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Definitions:

Weak Ties

Social connections that are not emotionally close or regularly maintained but can provide novel information or opportunities.

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A series of steps or stages that an individual goes through to generate novel and useful ideas or solutions.

Preparation

The action or process of making ready beforehand for a specific purpose or event.

Incubation

A process in creativity and problem-solving where an idea is allowed to develop or "incubate" subconsciously over time before being actively pursued or completed.