In a Two-Security Portfolio 25% of Your Money Is Invested

question 25

Multiple Choice

In a two-security portfolio 25% of your money is invested in Security X and the remainder in Security Y.If the standard deviations of Securities X and Y are 22 % and 7 %, respectively, and the portfolio variance is 0.01155625, what is the correlation between the two securities?

• A)-0.003275
• B)0.03275
• C)1.0
• D)-1.0

---

Definitions:

Bailment

describes a legal relationship in which one party temporarily relinquishes possession but not ownership of a piece of property to another party under agreement.

Carport

A covered structure used to provide limited protection to vehicles, primarily from rain and snow, which unlike a garage, is open on two or more sides.

Liable

Refers to being legally responsible for something, usually implying a duty to make restitution for harm or damage caused.

Salvage

A reward given to persons who voluntarily assist a sinking ship to recover its cargo from peril or loss.