Which of the Following Is a Correct Expression Concerning the Formula

question 70

Multiple Choice

Which of the following is a correct expression concerning the formula for the standard deviation of returns of a two-asset portfolio where the correlation coefficient is positive?

• A) σ^2rp < (W₁²σ12 + W22σ₂²)
• B) σ^2rp = (W₁2σ₁² + W22σ22)
• C) σ^2rp = (W₁²σ₁² - W₂²σ₂²)
• D) σ^2rp > (W₁²σ₁² + W₂²σ₂²)

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Definitions:

Hypothetical Reasoning

The cognitive process of thinking about situations that are not directly observed or real and exploring possible outcomes.

Inductive Reasoning

A method of reasoning in which specific observations or data are used to form a general conclusion or hypothesis.

Adolescent Egocentrism

is a characteristic of teenage thinking, which includes believing that one’s own experiences and feelings are unique and not understood by others.

Reciprocal Relationship

A mutual relationship in which parties exert influence on each other or benefit each other equally.