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:

Direct Labour-hours

Direct labour-hours refer to the amount of time spent by workers directly involved in the production process, used to allocate labour costs to units of output.

Machine-hours

A measure of production output or activity based on the number of hours machines are operating.

Product Diversity

The range and variety of products a company offers.

Parts Administration

Refers to the management and oversight of parts inventory, including ordering, stocking, and distributing components used in production or repair.