Stocks a and B Each Have an Expected Return of 15

question 103

Multiple Choice

Stocks A and B each have an expected return of 15%, a standard deviation of 20%, and a beta of 1.2.The returns on the two stocks have a correlation coefficient of +0.6.Your portfolio consists of 50% A and 50% B.Which of the following statements is CORRECT?

• A) The portfolio's expected return is 15%.
• B) The portfolio's standard deviation is greater than 20%.
• C) The portfolio's beta is greater than 1.2.
• D) The portfolio's standard deviation is 20%.
• E) The portfolio's beta is less than 1.2.

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Definitions:

Down Syndrome

A genetic disorder caused by the presence of an extra copy of chromosome 21, characterized by physical features, developmental delays, and varying degrees of intellectual disability.

Incomplete Dominance

A genetic phenomenon in which neither allele is dominant over the other, resulting in a phenotype that is a blend of both alleles.

Recessive Gene

A gene that expresses its traits only when paired with an identical gene, as opposed to a dominant gene's traits which can manifest with only one copy.

Heterozygous Pair

A genetic condition where an individual has two different alleles of a particular gene, one inherited from each parent.