A Portfolio Is Composed of Two Stocks, a and B

question 21

Multiple Choice

A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 24%, while stock B has a standard deviation of return of 18%. Stock A comprises 60% of the portfolio, while stock B comprises 40% of the portfolio. If the variance of return on the portfolio is .0380, the correlation coefficient between the returns on A and B is ________.

• A) .583
• B) .225
• C) .327
• D) .128

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Definitions:

Progresses

The act of moving forward or advancing towards a goal, improvement, or a higher stage.

Dopamine-Producing Neurons

Nerve cells in the brain that release dopamine, a neurotransmitter essential for movement, motivation, and pleasure.

Serotonin-Producing Neurons

Nerve cells that manufacture and release serotonin — a neurotransmitter important for mood regulation and other functions.

Parkinson's Disease

A degenerative disorder of the central nervous system that affects movement, often including tremors and stiffness.