What Is the Standard Deviation of a Portfolio Which Is

question 95

Multiple Choice

What is the standard deviation of a portfolio which is invested 20% in stock A, 30% in stock B and 50% in stock C?
$\begin{array}{llcc} \text { State of } & \text { Probability of } & \underline{\text { Returns if State Occurs }} \\\underline{ \text { Economy }} & \underline{\text { State of Economy }} & \underline{\text {Stock A\quad Stock B\quad Stock C}} \\ \text {Boom } & 10\% &15\% \quad \quad 10\%\quad \quad 5\%\\ \text { Normal} & 70\%& 9\%\quad \quad 6\%\quad \quad 7\%\\ \text { Recession } & 20\%&-14\%\quad \quad 2\%\quad \quad 8\% \\\end{array}$

• A)0.6%
• B)0.9%
• C)1.8%
• D)2.2%
• E)4.9%

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Definitions:

True-Length Line

A line in a drawing that accurately represents the actual size and length of an object in the specified view.

Hard Line

Strong, distinct lines used in drawing to represent solid edges, boundaries, or significant features of an object.

Break Line

A line used in drafting and design to interrupt and thereby shorten parts of drawings, indicating that the part continues beyond what is shown.

Distorted Details

Representations on a drawing where dimensions are altered to highlight specific features.