You Have Collected the Following Information for the Returns of the Elm

question 45

Multiple Choice

You have collected the following information for the returns of the Elm Corporation and the Maple Corporation: The covariance of the returns of the two securities is 277.2%%.
-Refer to the information above. If you invest 40% of your money in Elm and 60% in Maple, what is the standard deviation of the returns on your portfolio?

• A)18.95%
• B)8.16%
• C)23.52%
• D)none of the above

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Definitions:

P-value Approach

A method in hypothesis testing that uses the p-value, the probability of obtaining test results at least as extreme as the observed, under the assumption the null hypothesis is true.

Critical Values

Specific points along the scale of a test statistic that delineate the acceptance or rejection of the null hypothesis.

Two-Tailed Hypothesis

A statistical test where the area of interest lies in both tails of the distribution, testing for the possibility of a relationship in both directions.

Level of Significance

A threshold used to decide whether a hypothesis test results are statistically significant.