The Market Consists of Two Stocks

question 15

Multiple Choice

The market consists of two stocks. Stock F has an expected return of 9 percent and a standard deviation of 32 percent. Stock G has an expected return of 13 percent and a standard deviation of 50 percent. The correlation between the two stocks is -0.10. The efficient frontier is:

• A) the line between Stock F and Stock G.
• B) the line between the minimum variance portfolio and Stock F.
• C) the line between the minimum variance portfolio and Stock G.
• D) all to the right of Stock F on the risk/return graph.
• E) all to the right of Stock G on the risk/return graph.

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Definitions:

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The state of being free from moral fault or corruption, often emphasized in religious or ethical contexts.

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The 26th President of the United States, known for his foreign policy, conservation efforts, and progressive reforms.

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