Stock a Has an Expected Return of 17

question 55

Multiple Choice

Stock A has an expected return of 17.8 percent,and Stock B has an expected return of 9.6 percent.However,the risk of Stock A as measured by its variance is 3 times that of Stock B.If the two stocks are combined equally in a portfolio,what would be the portfolio's expected return?

• A)13.37 percent
• B)13.70 percent
• C)15.75 percent
• D)12.41 percent
• E)14.55 percent

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Definitions:

Pore Spaces

Voids or gaps found within soil or rock, where air or fluid can be stored.

Leaching

The process by which dissolved materials are washed away or carried with water down through the various layers of the soil.

Rhizobacteria

Beneficial bacteria that reside in the soil close to plant roots, often enhancing plant growth or protecting against pathogens.

Nod Factors

Signaling molecules produced by rhizobial bacteria that play a crucial role in the establishment of symbiosis with leguminous plants, leading to the formation of nitrogen-fixing nodules.