Stock J Has a Standard Deviation of 67 Percent and Stock

question 74

Multiple Choice

Stock J has a standard deviation of 67 percent and Stock K has a standard deviation of 51 percent. The correlation between the two stocks is -0.10. What is the standard deviation of a portfolio of the two assets with 35 percent invested in Stock J?

• A) 46.23%
• B) 38.64%
• C) 41.07%
• D) 35.19%
• E) 43.82%

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Definitions:

Null Hypothesis

A statement used in statistics that proposes no significant difference or effect.

Test Statistic

A value calculated from sample data that is used in hypothesis testing to determine if there is evidence to reject the null hypothesis.

Inferential Statistics

A branch of statistics focused on drawing conclusions and making predictions about a population based on a sample.

Inferential Parameters

Parameters derived from sample data for the purpose of making inferences about the larger population.