A Portfolio Consists of Two Securities: a 90-Day T-Bill and the S&P/TSX

question 23

Multiple Choice

A portfolio consists of two securities: a 90-day T-bill and the S&P/TSX Composite.The expected return on the T-bill is 4.5%.The expected return on the S&P/TSX Composite is 12% with a standard deviation of 20%.What is the portfolio standard deviation if the expected return for this portfolio is 15%?

• A)8.13%
• B)12.00%
• C)16.80%
• D)28.00%

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Definitions:

Quantity Change

A variation in the amount of goods or services produced or supplied, often measured to assess economic shifts or business performance.

Industry

A sector of the economy that involves the production and manufacturing of goods or the provision of services.

Long Run

A period during which all factors of production and costs are variable, in contrast with the short run where some costs are fixed.

Short Run

A period in economics during which at least one input, such as plant and equipment, is fixed, focusing on immediate effects of economic decisions.