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 Securityd.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 0.6.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:

Producer

An individual or organization that creates goods or services to sell to consumers.

Price Discrimination

The strategy of selling the same product or service at different prices to different groups of consumers, typically based on willingness to pay.

Deadweight Loss

A loss in economic efficiency that occurs when the equilibrium output is not achieved or when supply and demand are out of balance.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different consumers, based on willingness to pay.