Stock G Has a Standard Deviation of 49 Percent, and Stock

question 4

Multiple Choice

Stock G has a standard deviation of 49 percent, and Stock H has a standard deviation of 56 percent. The covariance between the two assets is 0.046. What is the variance of a portfolio with 40 percent of its assets invested in Stock G?

• A) 0.1686
• B) 0.1247
• C) 0.1096
• D) 0.1734
• E) 0.1535

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Definitions:

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, leading to competition based on quality, price, and marketing.

Economic Profits

The surplus or financial gains achieved by a firm or an individual after accounting for all explicit and implicit costs.

ATC Curve

The Average Total Cost curve in economics represents the total cost per unit of output, including both fixed and variable costs.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competitive pricing and product differentiation.