Use the Following Information to Answer the Question(s)below

question 54

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk-free rate is 3.5%.
-The volatility on the market portfolio (which is a 50-50 combination of the value and growth portfolios) is closest to:

• A)13.5%.
• B)15.2%.
• C)17.1%.
• D)19.0%.

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Definitions:

Large Companies

Corporations that operate on a vast scale, often characterized by significant market share, diverse operations, and large workforce, contributing substantially to economic activities.

Strategic Plans

Long-term, overarching plans that outline how an organization will achieve its goals and objectives within a specific timeframe.

Operational Plans

Detailed, short-term action plans that outline how goals or objectives will be achieved within a specific timeframe.

Strategic Management Process

A continuous practice that involves planning, monitoring, analyzing, and assessment of all that is necessary for an organization to meet its goals and objectives.