Stock a Has an Expected Return of 20%, and Stock

question 65

Multiple Choice

Stock A has an expected return of 20%, and stock B has an expected return of 4%.However, the risk of stock A as measured by its variance is 3 times that of stock B.If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return?

• A)4%
• B)12%
• C)20%
• D)Greater than 20%
• E)Need more information to answer.

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Definitions:

Philosophical Tradition

A historical school of thought or a set of doctrines that shapes the field of philosophy.

Religious Rituals

Ceremonial acts followed in religious practices, often symbolic in nature, aimed at fostering spiritual experiences or honor deities.

Ibn-Rushd

A medieval Andalusian polymath known in the Western world as Averroes, who made significant contributions to philosophy, theology, and medicine.

Al-Farabi

A renowned philosopher and scientist in the Islamic golden age, who made notable contributions in philosophy, logic, and music.