The Standard Deviation of a Portfolio That Has 40% of Its

question 56

Multiple Choice

The standard deviation of a portfolio that has 40% of its value invested in a risk-free asset and 60% of its value invested in a risky asset with a standard deviation of 30% is

• A) 18%.
• B) 14%.
• C) 21%.
• D) 24%.
• E) 20%.

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Definitions:

Proprietorships

A business owned and operated by a single individual, where there's no legal distinction between the owner and the business entity.

Corporations

Legal entities formed through a state charter, allowing owners to operate a business while being protected from personal liability beyond their investment.

Amended Returns

The process of revising previously submitted tax returns to correct any errors or include new information.

Loss

The result when an entity's expenses exceed its revenues, leading to a negative net income or deficit in its financial results.