A Portfolio Has 25% of Its Funds Invested in Security

question 32

Multiple Choice

A portfolio has 25% of its funds invested in Security C and 75% of its funds invested in Security D.Security C has an expected return of 8% and a standard deviation of 6%.Security D has an expected return of 10% and a standard deviation of 10%.The securities have a coefficient of correlation of .6.Which of the following values is closest to portfolio return and variance?

• A).090; .0081
• B).095; .001675
• C).095; .0072
• D).100; .00849
• E)Cannot calculate without the number of covariance terms.

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Definitions:

Staff Positions

Roles within an organization that are primarily focused on support functions, advising management rather than being involved directly in operational activities.

Line Positions

Positions within an organization that are directly involved in core business operations and have direct responsibility over achieving the organization's goals.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Product Line Groupings

The organization of related products into categories or series, typically based on their function, target market, or other characteristics, enabling easier management and marketing.