A Portfolio Is Comprised of fiVe Risky Stocks

question 12

Multiple Choice

A portfolio is comprised of five risky stocks. The standard deviations of these stocks are 5.6%, 12.8%, 2.3%, 8.9%, and 10.2%. The standard deviation of the portfolio:

• A) Is equal to the arithmetic average of the individual standard deviations.
• B) Must be greater than 2.3%.
• C) Must equal that of the market.
• D) Is equal to the weighted average of the individual standard deviations.
• E) Cannot be determined from the information provided.

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Definitions:

3-Ethyl-2-methylpentan-3-ol

A specific organic compound characterized by its molecular structure having a pentane backbone with an alcohol group (OH) attached to the third carbon, along with ethyl and methyl groups as substituents.

Random Phenomenon

An event or situation in which the outcome is unpredictable and cannot be determined prior to its occurrence.

National Football League

A professional American football league consisting of 32 teams, divided between the National Football Conference (NFC) and the American Football Conference (AFC).

Football Draft

Football Draft is an event in professional American football where teams select eligible college football players to add to their rosters, based on an ordering system that typically rewards teams with poorer performance records.