A Stock Fund Has a Standard Deviation of 16 Percent

question 27

Multiple Choice

A stock fund has a standard deviation of 16 percent and a bond fund has a standard deviation of 4 percent.The correlation of the two funds is .11.What is the weight of the stock fund in the minimum variance portfolio?

• A) 3.47 percent
• B) 6.48 percent
• C) 11.92 percent
• D) 14.67 percent
• E) 18.22 percent

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Definitions:

Nondelegable Duty

An obligation or duty that cannot be transferred to another party and must be performed by the individual or entity originally charged with it.

Duty Of Care

The legal obligation to avoid actions or omissions that could foreseeably harm others.

Principal

The primary party to a transaction, such as a contract or financial instrument, who has the rights and responsibilities directly related to it.

Agent

An individual authorized to act on behalf of another person or entity, often in a business setting.