Stock a Has a Standard Deviation of 25% Per Year

question 8

Multiple Choice

Stock A has a standard deviation of 25% per year and Stock B has a standard deviation of 20% per year. The correlation between Stock A and Stock B is .30. You have a portfolio of these two stocks wherein Stock B has a portfolio weight of 40%. What is your portfolio variance?

• A).03022
• B).03156
• C).03239
• D).03610
• E).03304

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Definitions:

Democracy

A form of government in which power is vested in the hands of the people, either directly or through elected representatives.

Montgomery Bus Boycott

Sparked by Rosa Parks’s arrest on December 1, 1955, for refusing to surrender her seat to a white passenger, a successful yearlong boycott protesting segregation on city buses; led by the Reverend Martin Luther King Jr.

Desegregating

The act of eliminating racial segregation, or the separation of different racial groups, in institutions or society.