The Volatility of Home Depot Share Prices Is 30% and That

question 24

Multiple Choice

The volatility of Home Depot Share prices is 30% and that of General Motors shares is 30%.When I hold both stocks in my portfolio and the stocks returns have zero correlation,the overall volatility of returns of the portfolio is

• A)unchanged at 30%.
• B)less than 30%.
• C)more than 30%.
• D)cannot say for sure

---

Definitions:

Treasury Stock

Shares that were issued and later reacquired by the issuing company, reducing shareholders' equity and outstanding shares.

Cash Dividend

A payment made by a company out of its earnings to shareholders, distributing profits in the form of cash.

Journal Entries

The method by which financial transactions are recorded in an accounting system, typically involving a debit to one or more accounts and a credit to another in equal amounts.

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.