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:

Percent

Percent is a term used to describe a number or ratio expressed as a fraction of 100, often used to indicate proportions, ratios, and shares in everything from statistics to financial rates.

Sales Increase

A rise in the quantity or volume of sales of goods and services over a specific period.

Percent

A ratio or fraction expressed as parts per hundred, used to denote a portion of a whole in terms of percentage.

Discount Mall

A shopping center or area where goods are sold at prices lower than the typical market value, often featuring a variety of discount stores and outlets.