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:

Carrying Costs

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs.

Cycle Counting

A method of inventory verification where a select portion of the stock held in a particular area is tallied on a predetermined day.

Inventory Records

Documentation of the quantities, locations, and statuses of products or materials that a company holds in stock.

Inventory Turnover

Cost of goods sold divided by average inventory.