What Is the Standard Deviation of a Portfolio That Is

question 322

Multiple Choice

What is the standard deviation of a portfolio that is invested 60% in stock A and 40% in stock B, given the following information?

• A) 1.58%
• B) 2.36%
• C) 4.06%
• D) 4.86%
• E) 5.51%

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Definitions:

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder, typically expressed as an annual percentage of the bond's face value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, usually expressed in years.

Perpetuity

A financial term for a constant stream of identical cash flows with no end.

Yield

The earnings from an investment, like dividends or interest, shown as a percentage of the investment's original cost or its current market valuation.