Instruction 16.2: Use the Information to Answer the Following Question(s)

question 12

Multiple Choice

Instruction 16.2:
Use the information to answer the following question(s) .
A U.S. investor is considering a portfolio consisting of 60% invested in the U.S. equity index fund and 40% invested in the British equity index fund. The expected returns for the funds are 10% for the U.S. and 8% for the British, standard deviations of 20% for the U.S. and 18% for the British, and a correlation coefficient of 0.15 between the U.S. and British equity funds.
-Refer to Instruction 16.2. What is standard deviation of the proposed portfolio?

• A) 38.00
• B) 19.20
• C) 19.00
• D) 14.45

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Definitions:

Assigned Fund Balance

Part of a governmental entity's fund balance that is earmarked for a specific use but can be changed by the entity's management.

Private Purpose Trust Fund

A type of trust fund in the public sector meant to benefit specific individuals, private organizations, or other governments.

Permanent Fund

A fund established to generate income for an organization without spending the principal amount, often used by nonprofit entities and governments.

Disabled Children

Individuals under the age of 18 who have physical or mental impairments that substantially limit one or more major life activities.