A Portfolio Has 40% of Its Value in IBM Shares

question 18

Multiple Choice

A portfolio has 40% of its value in IBM shares and the rest in Microsoft (MSFT) .The volatility of IBM and MSFT are 40% and 30%,respectively,and the correlation between IBM and MSFT is -0.3.What is the standard deviation of the portfolio?

• A)19.95%
• B)18.65%
• C)22.17%
• D)20.18%

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Definitions:

Allocated Fixed Costs

Fixed costs that are distributed across different departments or projects based on determined criteria.

Income From Operations

Earnings generated from the normal business activities of a company, excluding income from other sources like investments.

Decentralization

The distribution of decision-making authority to lower levels in an organization, allowing closer proximity to decision-making and customer interaction.

Responsibilities Delegated

Tasks or duties assigned to a subordinate or team member by a person with authority or leadership within an organization.