What Is the Variance of Return of a Three-Stock Portfolio

question 24

Multiple Choice

What is the variance of return of a three-stock portfolio (with unequal weights 25%,50%,and 25%) that produced returns of 20%,25%,and 30%,respectively?

• A) 10.00
• B) 12.50
• C) 15.00
• D) 20.00

---

Definitions:

Uncollectible Accounts

Accounts receivable that a company has determined it will not be able to collect due to customer default.

Direct Write-off

A method of accounting for bad debts where uncollectible accounts receivable are directly written off against income at the time they are deemed uncollectible.

Bad Debts Recovered

When an account receivable has been written off and is recovered, this account, which is in the Other Revenue category, is credited in the direct write-off method if the recovery is in a year following the write-off.

Allowance for Doubtful Accounts

A contra asset account that estimates the portion of receivables that may not be collectible, affecting a company’s net income and assets.