A Bank Is Planning to Set Up a New Branch

question 79

Multiple Choice

A bank is planning to set up a new branch.It expects the new branch to generate 20 percent of the total business of the bank after it is opened.The bank expects the returns on this branch to be 15 percent with a standard deviation of 5 percent.Currently the bank has a 12 percent rate of return with a standard deviation of 4 percent.The correlation between the returns on the new branch and the bank's current returns is expected to be 0.25.What is the bank's expected standard deviation after adding this branch?

• A)12.84 percent
• B)3.35 percent
• C)4.36 percent
• D)3.58 percent
• E)6.8 percent

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Definitions:

Fahrenheit

One of two common scales used for measuring temperature; measured in degrees Fahrenheit, or °F.

Apical Pulse

The pulse felt at the tip of the heart, often assessed by listening over the apex of the heart with a stethoscope.

Cardiography

The recording of electrical activity of the heart over a period of time, used in the diagnosis of heart conditions.

Temporal Artery

A major artery on each side of the head, above the temple, which supplies blood to the brain and other parts of the head.