Stock a Has a Standard Deviation of 20 Percent Per

question 22

Multiple Choice

Stock A has a standard deviation of 20 percent per year and stock B has a standard deviation of 15 percent per year.The correlation between stock A and stock B is .35.You have a portfolio of these two stocks wherein stock B has a portfolio weight of 40 percent.What is your portfolio variance?

• A) 0.02022
• B) 0.02156
• C) 0.02239
• D) 0.02247
• E) 0.02304

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Definitions:

Progression Principle

The principle that a need isn’t activated until the previous lower-level need is satisfied.

Hierarchy Principle

A system or organization in which people or groups are ranked one above the other according to status or authority.

Deficit Principle

The principle that a satisfied need does not motivate behaviour.

Safety Needs

Basic human necessities for security and protection from physical and emotional harm, as identified in Maslow's hierarchy of needs.