A Portfolio Is Composed of Two Stocks, a and B

question 13

Multiple Choice

A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 35%, while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .45. Stock A comprises 40% of the portfolio, while stock B comprises 60% of the portfolio. The standard deviation of the return on this portfolio is ________.

• A) 23%
• B) 19.76%
• C) 18.45%
• D) 17.67%

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Definitions:

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Abilities and traits that facilitate effective communication and interaction with other people.

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The expected behaviors, duties, and functions associated with a particular position or status within a group or society.

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