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:

Contract

A binding pact between parties that has legal force and can be upheld in court.

Accept

To agree to receive or undertake something offered.

Offer

A proposal by one party to another to enter into a legal agreement, constituting one of the essential elements of a contract.

Counteroffer

A response to an offer in a negotiation, where the original offer is rejected and replaced with a new proposal.