The Expected Returns for ABC Company and XYZ Company Are

question 27

Multiple Choice

The expected returns for ABC Company and XYZ Company are 12 percent and 9 percent,respectively.The standard deviation is 20 percent for ABC and 15 percent for XYZ.What is the portfolio standard deviation if one-third of the portfolio is in ABC and the two securities have perfect positive correlation?

• A) 16.67%
• B) 10.00%
• C) 2.78%
• D) 1.00%

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Definitions:

Written Contract

A legally binding agreement between two or more parties that is documented and signed in writing.

Period of Two Years

A specific duration or time frame that spans exactly twenty-four months or two calendar years.

Part Performance

An equitable doctrine that allows a contract, typically not in writing, to be enforced if one party has taken significant steps to perform their part of the agreement.

Interest in Land

Legal rights or investments in real estate that involve ownership or other financial claims on the property.