Stocks a and B Each Have an Expected Return of 15

question 110

Multiple Choice

Stocks A and B each have an expected return of 15%, a standard deviation of 20%, and a beta of 1.2. The returns on the two stocks have a correlation coefficient of +0.6. Your portfolio consists of 50% A and 50% B. Which of the following statements is CORRECTσ

• A) the portfolio's expected return is 15%.
• B) the portfolio's standard deviation is greater than 20%.
• C) the portfolio's beta is greater than 1.2.
• D) the portfolio's standard deviation is 20%.
• E) the portfolio's beta is less than 1.2.

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Definitions:

Phagocytosis

The ingestion of particles by a cell or phagocyte, playing a crucial role in the immune response by clearing pathogens.

Antigen-Antibody Complexes

Molecular structures formed when antibodies bind to their specific antigens, often triggering an immune response.

Eosinophils

A type of white blood cell part of the immune system, playing a key role in combating parasites and involved in allergic reactions and asthma.

Basophils

Granulated white blood cells.