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A Stock Fund Has a Standard Deviation of 18% and a Bond

question 70

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A stock fund has a standard deviation of 18% and a bond fund has a standard deviation of 10%. The correlation of the two funds is .15. What is the approximate weight of the stock fund in the minimum variance portfolio?


Definitions:

Total Earnings

The sum of all earnings generated by a company, including income from operations, investments, and other sources before taxes and expenses.

Merger Premium

The additional cost above the market price that a company pays to acquire another company.

Market Price

The present-day value at which you can sell or buy an asset or service.

Shares Outstanding

The total number of shares of a corporation's stock that are owned by shareholders, including restrictions shares and those held by the public.

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