You Construct an Equally Weighted,two Asset Portfolio Between ACME Corp

question 39

Multiple Choice

You construct an equally weighted,two asset portfolio between ACME Corp.,an American valve and regulator manufacturer,and Wayne Enterprises,a Hong Kong property company.The standard deviation of the returns on ACME's shares is 30% and 55% on Wayne Enterprises.Because of the international diversification,the returns on the two companies have no covariance (correlation = zero) .What is the standard deviation of returns of the portfolio?

• A) 9.81%
• B) 17.60%
• C) 22.50%
• D) 31.32%
• E) 42.50%

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Surplus Value

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