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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