What Is the Standard Deviation of a Portfolio of Two

question 63

Multiple Choice

What is the standard deviation of a portfolio of two stocks given the following data? Stock A has a standard deviation of 30%.Stock B has a standard deviation of 18%.The portfolio contains 60% of stock A and the correlation coefficient between the two stocks is -1.0.

• A) 0.0%
• B) 10.8%
• C) 18.0%
• D) 24.0%

---

Definitions:

Local Market

A market within a specific geographical area where goods and services are exchanged within the local community.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, largely driven by international trade and investment and aided by information technology.

Economic Reforms

Government policies aimed at improving a country's economic efficiency by reducing restrictions, encouraging free-market conditions, and fostering competition.

Free Trade

Free trade is a policy framework in which governments do not discriminate against imports or interfere with exports, allowing goods and services to move freely between countries.