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:

Consciousness

A state of awareness of oneself and the environment, characterized by the ability to experience thoughts, feelings, and perceptions.

Attentional Mechanisms

The processes and systems in the brain that allow individuals to focus on specific stimuli while ignoring others.

Prefrontal Cortex

A region of the brain located at the front of the frontal lobe, associated with complex cognitive behavior, personality expression, decision making, and moderating social behaviour.

Reticular Activating Formation

A set of connected nuclei in the brains of vertebrates that is responsible for regulating wakefulness and sleep-wake transitions.