A Stock Has an Expected Return of 14 Percent and a Standard

question 27

Multiple Choice

A stock has an expected return of 14 percent and a standard deviation of 61 percent. What is the weight of the stock in the minimum variance portfolio consisting of the stock and the risk-free asset?

• A) .00
• B) .18
• C) .06
• D) .21
• E) .32

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Definitions:

Correlation Coefficient

A numerical indicator that demonstrates how significantly two variables move in tandem, highlighting the intensity and orientation of their connection.

Grade Point Averages

A numerical representation of a student's academic performance, typically on a scale from 0 to 4.0, used by educational institutions to measure overall achievement.

Hours of Sleep

The duration of sleep an individual gets, crucial for health and well-being, affecting cognitive function and physical health.

Correlation Coefficient

A statistical measure that quantifies the degree of relationship or association between two variables, ranging from -1 to 1.