A Stock Fund Has a Standard Deviation of 18 Percent

question 26

Multiple Choice

A stock fund has a standard deviation of 18 percent and a bond fund has a standard deviation of 10 percent.The correlation of the two funds is .15.What is the approximate weight of the stock fund in the minimum variance portfolio?

• A) 11 percent
• B) 15 percent
• C) 20 percent
• D) 24 percent
• E) 27 percent

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Definitions:

Identical Twins

Twins who develop from a single fertilized egg, sharing 100% of their genetic material and typically having very similar physical appearances.

Standardized IQ

A measure of an individual's intelligence relative to a large, normative population, based on a standardized intelligence quotient (IQ) test.

Scores Increasing

A phenomenon or outcome where numeric values, such as test scores or performance metrics, show an upward trend over time.

Flynn Effect

The observed rise over time in standardized intelligence test scores, named after James R. Flynn.