Consider the Following Probability Distribution for Stocks a and B

question 37

Multiple Choice

Consider the following probability distribution for stocks A and B: $$\begin{array} { c c c c } \text { State } & \text { Probability } & \text { Return on Stock A } & \text { Return on Stock B } \\1 & 0.10 & 10 \% & 8 \% \\2 & 0.20 & 13 \% & 7 \% \\3 & 0.20 & 12 \% & 6 \% \\4 & 0.30 & 14 \% & 9 \% \\5&0.20 & 15 \% & 8 \%\end{array}$$
The expected rate of return and standard deviation of the global minimum variance portfolio,G,are __________ and ___________,respectively.

• A) 10.07%;1.05%
• B) 8.97%;2.03%
• C) 10.07%;3.01%
• D) 8.97%;1.05%
• E) none of these

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Definitions:

Demand Curve

A visual diagram that illustrates the connection between a product's price and the amount consumers want to purchase.

Paired-comparison Method

A technique used in assessment and decision-making that involves comparing each option with every other option in pairs to judge which is preferable.

Performance Appraisal

A regular review of an employee’s job performance and overall contribution to a company, typically involving feedback and discussions on areas of strength and areas needing improvement.

Individual Employee

Refers to a single worker or staff member within an organization, distinguishing them from groups or teams.