Stocks A,B,and C All Have an Expected Return of 10

question 98

Multiple Choice

Stocks A,B,and C all have an expected return of 10% and a standard deviation of 25%.Stocks A and B have returns that are independent of one another,i.e. ,their correlation coefficient,r,equals zero.Stocks A and C have returns that are negatively correlated with one another,i.e. ,r is less than 0.Portfolio AB is a portfolio with half of its money invested in Stock A and half in Stock B.Portfolio AC is a portfolio with half of its money invested in Stock A and half invested in Stock C.Which of the following statements is CORRECT?

• A) Portfolio AC has an expected return that is less than 10%.
• B) Portfolio AC has an expected return that is greater than 25%.
• C) Portfolio AB has a standard deviation that is greater than 25%.
• D) Portfolio AB has a standard deviation that is equal to 25%.
• E) Portfolio AC has a standard deviation that is less than 25%.

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Definitions:

Unionization Effects

The impact that the process of organizing workers into unions can have on labor practices, wages, work conditions, and business operations.

Job Satisfaction

relates to the level of fulfillment, contentment, or happiness that an individual derives from their job, often influencing productivity and loyalty.

Unionized Workers

Workers who are part of a labor organization that acts on their behalf in bargaining sessions with employers.

Labor Problem

Refers to issues and conflicts between workers and management, often relating to working conditions, wages, and employment rights.