A Portfolio Has 25% of Its Funds Invested in Security

question 124

Multiple Choice

A portfolio has 25% of its funds invested in Security C and 75% of its funds invested in Security D. Security C has an expected return of 8% and a standard deviation of 6%. Security D has an expected return of 10% and a standard deviation of 10%. The securities have a coefficient of correlation of 0.6. Which of the following values is closest to portfolio return and variance?

• A) .090; .0081
• B) .095; .001675
• C) .095; .0072
• D) .100; .00849
• E) Cannot calculate without the number of covariance terms.

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Definitions:

Cronbach's Coefficient Alpha

Cronbach's Coefficient Alpha is a statistic used to assess the internal consistency or reliability of a set of scale or test items.

Kuder-Richardson

A method of calculating internal consistency by using all the possible split-half combinations. This is done by correlating the scores for each item on the test with the total score on the test and finding the average correlation for all of the items.

Americans with Disabilities Act

A civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life.

Accommodations

Adjustments made in educational or workplace settings to support the needs of individuals with disabilities or specific challenges.