What Is the Standard Deviation of a Portfolio of Two

question 1

Multiple Choice

What is the standard deviation of a portfolio of two shares given the following data?
Share A has a standard deviation of 18%. Share B has a standard deviation of 14%. The portfolio contains 40% of Share A and the correlation coefficient between the two shares is -.23.

• A)9.7%
• B)12.2%
• C)14.0%
• D)15.6%

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Definitions:

Elapsed

Elapsed refers to the amount of time that has passed since the beginning of an event or process.

Following Series

A sequence of numbers or items arranged according to a specific rule or pattern, with each element derived based on the preceding ones.

Miles Per Gallon

A measure of fuel economy that represents the number of miles a vehicle can travel on one gallon of fuel.

Gallons

A unit of volume in the US customary and imperial systems, used to measure liquids. One US gallon is equal to approximately 3.785 liters.