You Own a Portfolio Comprised of 4 Stocks and the Economy

question 57

Multiple Choice

You own a portfolio comprised of 4 stocks and the economy has 3 possible states.Assume you invest your portfolio in a manner that results in an expected rate of return of 7.5 percent,regardless of the economic state.Given this,what must be value of the portfolio's variance be?

• A) negative, but not -1
• B) -1.0
• C) 0.0
• D) 1.0
• E) positive, but not +1

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Definitions:

Common Cold

A viral infection of the upper respiratory system, characterized by congestion, runny nose, and sneezing.

Influenza

Also known as the flu, it is a highly contagious viral infection that affects the respiratory system, characterized by fever, chills, muscle aches, cough, and fatigue.

Allergy

An immune system reaction to a foreign substance (allergen) that is not typically harmful to the body.

Surfactant

A fatty molecule on the respiratory membranes.