Stock a Has a Standard Deviation of 15 Percent Per

question 73

Multiple Choice

Stock A has a standard deviation of 15 percent per year and stock B has a standard deviation of 21 percent per year. The correlation between stock A and stock B is .32. You have a portfolio of these two stocks wherein stock B has a portfolio weight of 60 percent. What is your portfolio standard deviation?

• A) 14.87 percent
• B) 15.59 percent
• C) 16.91 percent
• D) 17.45 percent
• E) 18.03 percent

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Definitions:

Private Market

A sector of the economy where transactions occur between private entities without significant government intervention, dealing in goods, services, and financial assets.

Rival in Consumption

A property of a good whereby one person's use of the good reduces the ability of another person to use the same good.

Individual Marginal Benefit

The additional satisfaction or utility that an individual derives from consuming one more unit of a good or service.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and other forms of involvement.