Your Portfolio Has 50% of Its Value Invested in Bombardier

question 17

Multiple Choice

Your portfolio has 50% of its value invested in Bombardier and the remainder invested in Lululemon.Bombardier stock has a volatility of 25%,while Lululemon stock has a volatility of 10%.If the correlation between Bombardier and Lululemon is -0.1,what is the standard deviation of your portfolio?

• A)16.7%
• B)17.5%
• C)13%
• D)17.4%
• E)1.7%

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Definitions:

Microeconomics

Branch of economics that deals with the behavior of individual economic units—consumers, firms, workers, and investors—as well as the markets that these units comprise.

Benefit

The advantage or profit gained from something.

Absolute Advantage

The ability of a country, individual, or firm to produce a good more efficiently than another entity using the same amount of resources.

Comparative Advantage

An economic theory that suggests that countries or entities gain and benefit from trading if they specialize in producing goods for which they have a lower opportunity cost.