Cinderella Plans to Form a Portfolio with Two Securities: Jaq

question 56

Multiple Choice

Cinderella plans to form a portfolio with two securities: Jaq and Gus.The correlation between the two securities is -1.Given the following forecasts,what are the weights in Jaq and Gus that will set the standard deviation of the portfolio equal to zero?

• A) Portfolio weights in Jaq and Gus are 74.37% and 25.63%, respectively
• B) Portfolio weights in Jaq and Gus are 25.63% and 74.37%, respectively
• C) Portfolio weights in Jaq and Gus are 60.51% and 39.49%, respectively
• D) Portfolio weights in Jaq and Gus are 39.49% and 60.51% respectively

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Definitions:

Coenzyme FAD

A redox-active coenzyme associated with various enzymes and involved in several important metabolic reactions, full name flavin adenine dinucleotide.

Phosphorylated

Refers to a molecule that has been modified by the addition of a phosphate group, often altering its function or activity.

Glucose

A simple sugar and a key energy source for cells, it plays a critical role in cellular respiration and energy metabolism.

Vitamin B12

An essential vitamin necessary for the normal functioning of the brain and nervous system, and for the formation of blood.