Assume There Is a Fixed Exchange Rate Between the Canadian

question 33

Multiple Choice

Assume there is a fixed exchange rate between the Canadian and U.S.dollar.The expected return and standard deviation of return on the U.S.stock market are 10% and 15% respectively.The expected return and standard deviation of return on the Canadian stock market are 12% and 16% respectively.The covariance of returns between the U.S.and Canadian stock markets is .012.If you invested 50% of your money in the Canadian stock market and 50% in the U.S.stock market,the standard deviation of return on your portfolio would be __________.

• A) 10.96%
• B) 12.25%
• C) 13.42%
• D) 15.50%

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Definitions:

Accrued Expense

An expense that has been incurred but not yet paid or recorded in the accounting records.

Annual Property Taxes

Taxes levied by local governments on the value of real estate property, paid yearly by the property owners.

Paid

Refers to the status of having settled an obligation or receiving compensation for services or goods.

Accrued Revenue

Represents income that has been earned but not yet received or recorded at the statement date.