Consider a Portfolio That Consists of an Equal Investment in 20

question 93

Multiple Choice

Consider a portfolio that consists of an equal investment in 20 firms.For each of these firms,there is a 70% probability that the firms will have a 16% return and a 30% that they will have a - 8% return.Each of these firms returns are independent of each other.The standard deviation of this portfolio is closest to:

• A) 2.5%
• B) 4.2%
• C) 8.8%
• D) 11.0%

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.

ABC Analysis

A method of categorizing inventory into three classes, A, B, and C, based on their value, volume, or frequency, to prioritize management focus and resources.

SKU

Stock Keeping Unit, a unique identifier for each distinct product and service that can be purchased.