Suppose You Own a Two-Security Portfolio

question 20

Multiple Choice

Suppose you own a two-security portfolio.You have 35 percent of your money invested in Security X and the remainder in Security Y.The standard deviations of Securities X and Y are 10 percent and 15 percent,respectively.What is the correlation between the two securities if the portfolio variance is 0.013225?

• A) 0.0055
• B) 0.0137
• C) 0.3654
• D) 0.9148

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Definitions:

Cause and Effect

A relationship between two events where one event (the cause) directly results in the other event (the effect).

Applied Research

Research aimed at solving practical problems rather than acquiring knowledge for knowledge's sake.

Operational Definitions

Clear, detailed descriptions of how variables are measured or defined within a study.

Bias

A systematic error or deviation from true values in data collection, analysis, interpretation, or review.