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What Is the Standard Deviation of a Portfolio of Two

question 62

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What is the standard deviation of a portfolio of two stocks given the following data: Stock A has a standard deviation of 30%. Stock B has a standard deviation of 18%. The portfolio contains 60% of stock A, and the correlation coefficient between the two stocks is -1.


Definitions:

Frequency Distribution

The representation, often in the form of a table or graph, of how the values in a data set are distributed across distinct values or ranges of values, showing the frequency of each value or range.

Bar Chart

A graphical representation of data using bars of different heights or lengths proportional to the values they represent.

Histogram

A graphical representation of the distribution of numerical data, where the data is divided into bins or intervals, and the frequency of data within each bin is depicted by bars.

Dotplot

A simple graphical display used to compare frequency counts within categories or groups.

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