Consider an Equally Weighted Portfolio That Contains Five Stocks

question 100

Multiple Choice

Consider an equally weighted portfolio that contains five stocks.If the average volatility of these stocks is 40% and the average correlation between the stocks is .5,then the volatility of this equally weighted portfolio is closest to:

• A).17.
• B).03.
• C).41.
• D).19.

---

Definitions:

Received

A term denoting that something has been accepted or collected, often used in financial transactions or in the acknowledgment of messages or goods.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Fiscal Period

A specific time period used for accounting purposes and financial reporting, typically a year, broken into quarters or months.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.