The Chahad Bank Wants to Open a New Branch in a Distant

question 54

Multiple Choice

The Chahad Bank wants to open a new branch in a distant city with very different economic conditions.Currently,the bank has an expected return of 15% with a standard deviation of 7%.The new branch is expected to have a return of 20% with a standard deviation of 10%.The correlation between the bank's returns and the returns from the new branch is -0.3.The new branch is expected to contribute 10% of the bank's revenues.What is the standard deviation of returns for the bank if they add the new branch? (Round your answer to the nearest 0.1%)

• A)36.9%
• B)6.1%
• C)50.3%
• D)7.1%
• E)6.7%

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Definitions:

Big Five Traits

A model proposing that five broad dimensions – openness, conscientiousness, extraversion, agreeableness, and neuroticism – sufficiently capture most aspects of personality.

Universally

Applicable or occurring everywhere or in all cases without exception.

Openness

A personality trait that describes the degree to which an individual is open to experiencing a variety of activities, engaging in imaginative activities, and willing to entertain new ideas.

Individualism

A social theory favoring freedom of action for individuals over collective or state control.