You Have a Portfolio Which Is Comprised of 72 Percent

question 54

Multiple Choice

You have a portfolio which is comprised of 72 percent of stock A and 28 percent of stock B.What is the variance of this portfolio?

• A) 190.9
• B) 203.8
• C) 268.1
• D) 290.9
• E) 306.9

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Definitions:

Utility Function

A formula that quantifies the happiness or satisfaction a consumer gains from consuming different combinations of goods and services.

Edgeworth Box

A diagram used in microeconomics to show the distribution of resources or goods between two parties and to illustrate potential gains from trade.

Pareto Efficient

A Pareto efficient outcome is one in which it is impossible to make any one individual better off without making at least one individual worse off, indicating an optimal allocation of resources.

Utility Function

A mathematical representation of how a consumer's preferences between different goods or services translate into levels of satisfaction or utility.