You Own a Portfolio Comprised of 4 Stocks and the Economy

question 18

Multiple Choice

You own a portfolio comprised of 4 stocks and the economy has 3 possible states. Assume you invest your portfolio in a manner that results in an expected rate of return of 7.5%, regardless of the economic state. Given this, what must be value of the portfolio's variance be?

• A)negative, but not −1
• B)−1.0
• C)0
• D)1.0
• E)positive, but not +1

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Definitions:

Ridicule

To mock, taunt, or make fun of someone or something in a demeaning way.

Neglect

The failure to provide for or attend to someone's needs, care, or wellbeing.

Low-income

A term describing individuals or families that earn significantly less than the average income, often leading to limited access to resources and opportunities.

Middle-income

refers to individuals, families, or countries that fall between the economic classification of poor and wealthy, often characterized by moderate living standards and financial stability.