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

question 94

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 with an equal amount in each,and the stocks returns have a correlation of minus 1,the overall volatility of returns of the portfolio is

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

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Definitions:

Universal Process Approach

A theory in management that assumes all organizations, regardless of their specific nature, follow the same fundamental principles.

Systems Approach

A way of analysis that studies the entity as an integrated and interacting system of components or variables to address complexities.

Validate the Real Story

The act of verifying or confirming that a narrative or account of events is accurate and truthful.

Factual Errors

Mistakes in the representation of facts, often due to incorrect data, misunderstanding, or misinterpretation of information.