Stocks a and B Each Have an Expected Return of 12%,a

question 80

Multiple Choice

Stocks A and B each have an expected return of 12%,a beta of 1.2,and a standard deviation of 25%.The returns on the two stocks have a correlation of 0.6.Portfolio P has 50% in Stock A and 50% in Stock B.Which of the following statements is correct?

• A)Portfolio P has a beta that is greater than 1.2.
• B)Portfolio P has a standard deviation that is greater than 25%.
• C)Portfolio P has a standard deviation that is less than 25%.
• D)Portfolio P has a beta that is less than 1.2.

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Definitions:

Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Paranoid Schizophrenia

A type of schizophrenia characterized by prominent delusions of persecution or grandeur.

Methadone

A synthetic opioid used medically as a pain reliever and as part of drug addiction detoxification and maintenance programs.

Injection

The act of administering a liquid, especially a drug, into a person's body using a needle and syringe.