What Is the Standard Deviation of a Portfolio Which Is

question 123

Multiple Choice

What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?
$\begin{array}{llcc} \text { State of } & \text { Probability of } & \underline{\text { Returns if State Occurs }} \\\underline{ \text { Economy }} & \underline{\text { State of Economy }} & \underline{\text {Stock S\quad Stock T}} \\ \text {Boom } & 10\% &12\% \quad \quad 4\%\\ \text { Normal} & 65\%&9\%\quad \quad6\%\\\text { Recession }&25\%&2\%\quad \quad9\%\\\end{array}$

• A)1.4%
• B)1.9%
• C)2.6%
• D)5.7%
• E)7.2%