Stock a Has an Expected Return of 20%, and Stock

question 40

Multiple Choice

Stock A has an expected return of 20%, and stock B has an expected return of 4%. However, the risk of stock A as measured by its variance is 3 times that of stock B. If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return?

• A) 20.0%.
• B) 4.0%.
• C) 12.0%.
• D) Greater than 20%.

---

Definitions:

Welfare

A system that provides assistance and support, especially in terms of health, well-being, and happiness, to individuals in need.

Participative Style

A leadership approach that involves employees in decision-making processes, enhancing engagement, and commitment.

Competency Perspective

An approach that focuses on identifying and developing core competencies or skills that are critical for achieving competitive advantage and operational effectiveness.

Implicit Leadership

Implicit leadership refers to the unconscious assumptions and expectations people have about the attributes and behaviors that characterize effective leaders.