An Asset Has a Standard Deviation of 5% and a Correlation

question 20

Multiple Choice

An asset has a standard deviation of 5% and a correlation with the market portfolio of 0.70.If the market has a standard deviation of 28%,what is the beta of the asset?

• A) \( 0.13 \)
• B) \( 0.31 \)
• C) \( 0.60 \)
• D) \( 0.68 \)

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Definitions:

Stop-payment Order

A request made to a bank by an account holder to not pay a check that has been issued or to halt a payment that has been preauthorized.

Holder In Due Course

A term relating to negotiable instruments, denoting a party that has received an instrument in good faith, for value, and without notice of any defects or claims against it.

Intermediary Banks

Financial institutions that serve as a middleman between the payer and the payee in transactions, particularly in international wire transfers.

Payment Orders

Instructions to transfer money from one bank account to another, often used in international trade and electronic funds transfers.