Stock a Has an Expected Return of 10% and a Standard

question 90

Multiple Choice

Stock A has an expected return of 10% and a standard deviation of 10%.Stock B has an expected return of 15% and a standard deviation of 20%.The two stocks are perfectly negatively correlated ( = -1) .What set of weights yields a portfolio with a zero variance?

• A) 2/3 in Stock A; 1/3 in Stock B
• B) 2/3 in Stock B; 1/3 in Stock A
• C) 2 in Stock A; -1 in Stock B
• D) 2 in Stock B; -1 in Stock A
• E) None of the above.

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Definitions:

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow, organizing human needs into a hierarchy, from basic physiological needs to safety, love/belonging, esteem, and self-actualization needs.

Distress

Negative stress that arises when demands exceed an individual's coping abilities, resulting in psychological strain or anxiety.

High Achievers

Individuals who consistently perform at a high level and achieve significant success in their activities.

Self-Actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.