What Is the Standard Deviation of the Returns on a Portfolio

question 25

Multiple Choice

What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C.  $$\begin{array} { l ccccc } { \text { State of } } & { \text { Probability of } } &&\text { Rate of Return }\\\text { Economy } & \text { State of Economy } & &{ \text { if State Occurs } } \\& & \text { Stock A } & \text { Stock B } & \text { Stock C } \\\text { Boom } & .04 & .17& .09 & .09 \\\text { Normal } & .81 & .08& .06 & .08 \\\text { Bust } &.15& - .24& - .02& -.13\end{array}$$

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Definitions:

Corporate Strategy

The approach and actions a company takes to achieve its business goals and to secure a competitive position in the market.

IT Steering Committee

A group of senior executives who provide direction, guidance, and oversight for an organization's IT strategies, policies, and investments.

Top-Level IT Managers

Senior executives responsible for overseeing the information technology strategies and operations within an organization.

Functional Area Managers

Managers responsible for specific departments within a company, such as sales, marketing, or finance, focusing on specialized tasks and strategies.