The Volatility of Home Depot Share Prices Is 30% and That

question 61

Multiple Choice

The volatility of Home Depot share prices is 30% and that of General Motors shares is 30%.When I hold both stocks in my portfolio and the stocks' returns have a correlation of 1,the overall volatility of returns of the portfolio is:

• A)more than 30%.
• B)less than 30%.
• C)unchanged at 30%.
• D)zero.
• E)Cannot say for sure

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Definitions:

Flexibility

The ability to adapt to changes, challenges, and new circumstances in an efficient and responsive manner, often considered critical in business strategy and operations.

International Strategy

A plan adopted by a business to guide its operations and competitive approach across national borders.