An Investor Can Design a Risky Portfolio Based on Two

question 76

Multiple Choice

An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 20%, while the standard deviation on stock B is 15%. The correlation coefficient between the returns on A and B is 0%. The rate of return for stocks A and B is 20% and 10% respectively. The standard deviation of return on the minimum-variance portfolio is ________.

• A) 0%
• B) 6%
• C) 12%
• D) 17%

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Definitions:

Total Product Cost

The sum of all costs directly or indirectly associated with producing a product, including materials, labor, and overhead.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific products or services based on the activities and resources that go into their production.

Direct Labor Cost

Refers to the total amount paid to workers directly involved in the production of goods or services, including wages and other related expenses.

Predetermined Overhead Rate

An estimated rate used to charge overhead costs to products or job orders, based on a selected allocation base anticipated before the accounting period.