Here Are the Expected Returns on Two Stocks: If

question 4

Multiple Choice

Here are the expected returns on two stocks: If you form a 50-50 portfolio of the two stocks,what is the portfolio's standard deviation?

• A) 8.1%
• B) 10.5%
• C) 13.4%
• D) 16.5%
• E) 20.0%

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Definitions:

Dishonest Answers

Responses provided by individuals that intentionally hide the truth or mislead, often for personal gain or to avoid negative outcomes.

Correlation

Usually a number between +1.0 and -1.0 that indicates whether and how much two variables are related. Correlation indicates whether an increase in one variable will increase or decrease another variable. Correlation indicates only that two variables are somehow related, not that one variable causes the other to increase or decrease.

Variables

Elements or factors that can change and affect the outcome of experiments or studies, often manipulated or measured by researchers.

Causal Link

The relationship between two events where one is the result of the occurrence of the other; a cause-effect relationship.