Stocks a and B Are Quite Similar: Each Has an Expected

question 101

Multiple Choice

Stocks A and B are quite similar: Each has an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of 0.6. Portfolio P has 50% in Stock A and 50% in Stock B. Which of the following statements is CORRECTσ

• A) portfolio p has a standard deviation that is greater than 25%.
• B) portfolio p has an expected return that is less than 12%.
• C) portfolio p has a standard deviation that is less than 25%.
• D) portfolio p has a beta that is less than 1.2.
• E) portfolio p has a beta that is greater than 1.2.

---

Definitions:

Data to Information

The transformation of raw data into meaningful information through processes such as organization, analysis, and interpretation to support decision-making.

Sustainability Practices

These are methods and strategies implemented by individuals, businesses, and societies to meet their needs without compromising the ability of future generations to meet theirs, focusing on environmental protection, social equity, and economic viability.

Predictive Analytics

The use of data, statistical algorithms, and machine learning techniques to identify the likelihood of future outcomes based on historical data.

Reverse Flows

The process of moving goods from their final destination back to the vendor or manufacturer for returns, recycling, or disposal.