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

question 111

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 of the S&P/TSX Composite is 18% with a standard deviation of 30%.What is the portfolio expected return if the standard deviation for this portfolio is 50%?

• A)12.60%
• B)27.00%
• C)30.00%
• D)47.00%

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Definitions:

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

Frosting

A sweet, often creamy glaze made of sugar with liquid (such as water or milk) and sometimes flavored, used to coat or decorate baked goods.

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.

Conversion Costs

Expenses incurred during the transformation of raw materials into finished goods, typically including direct labor and manufacturing overhead costs.