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

question 55

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 standard deviation of a portfolio with 40 percent of its assets invested in Stock G?

• A) 41.64%
• B) 33.35%
• C) 44.07%
• D) 39.52%
• E) 35.31%

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Definitions:

Productivity of Labor

The output per labor hour or the efficiency with which labor is utilized in the production process.

Monopsonist

An entity that is the only buyer in a market, giving it significant control over the price and terms of purchase of goods or services.

Upsloping Supply Curve

A supply curve that shows an increase in quantity supplied as the price increases, indicating a direct relationship between price and quantity supplied.

Agency Shop

A place of employment where the employer may hire either labor union members or nonmembers but where those employees who do not join the union must either pay union dues or donate an equivalent amount of money to a charity.