Stocks a and B Each Have an Expected Return of 15%,a

question 95

Multiple Choice

Stocks A and B each have an expected return of 15%,a standard deviation of 20%,and a beta of 1.2.The returns on the two stocks have a correlation coefficient of +0.6.You have a portfolio that consists of 50% A and 50% B.Which of the following statements is CORRECT?

• A) The portfolio's beta is less than 1.2.
• B) The portfolio's expected return is 15%.
• C) The portfolio's standard deviation is greater than 20%.
• D) The portfolio's beta is greater than 1.2.
• E) The portfolio's standard deviation is 20%.

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Definitions:

Myofilaments

Protein filaments consisting primarily of actin and myosin that function in the contraction and relaxation of muscle cells.

Thin Filaments

Protein fibers in muscle cells that work with thick filaments to cause muscle contraction.

Sarcolemma

The specialized cell membrane that surrounds muscle cells, playing a key role in muscle contraction and signal transmission.

Endomysium

A thin layer of connective tissue that individually encases each muscle fiber.