A Portfolio Has 25% of Its Funds Invested in Security

question 25

Multiple Choice

A portfolio has 25% of its funds invested in Security C and 75% of its funds invested in Security D. Security C has an expected return of 8% and a standard deviation of 6%.Security D has an
Expected return of 10% and a standard deviation of 10%.The securities have a coefficient of
Correlation of 0.6.Which of the following values are the portfolio return and variance?

• A).090; .0081
• B).095; .001675
• C).095; .0072
• D).100; .00849
• E)Cannot calculate without the number of covariance terms.

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Definitions:

Boundaryless Organization

An organization that eliminates internal boundaries among subsystems and external boundaries with the external environment.

Network of Alliances

A strategic formation of partnerships or collaborations between companies or organizations to achieve specific objectives or enhance competitive advantage.

Project Teams

Groups of individuals brought together to work on a specific project, with a defined goal and timeline, often cross-functional and multidisciplinary in nature.

Permanent Nature

The intrinsic and enduring characteristics of something, implying that it remains unchanged over time.