A Portfolio Has 45% of Its Value in IBM Shares

question 10

Multiple Choice

A portfolio has 45% of its value in IBM shares and the rest in Microsoft (MSFT) . The volatility of IBM and MSFT are 33% and 35%, respectively, and the correlation between IBM and MSFT is 0. What is the standard deviation of the portfolio?

• A) 19.45%
• B) 27.96%
• C) 34.04%
• D) 24.31%

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Definitions:

Hidden Costs

Expenses not readily apparent at the time of purchase or decision-making, which can make a product or service more expensive than initially thought.

Cognitive Dissonance

A psychological state of tension that occurs when an individual holds two conflicting thoughts, beliefs, attitudes, or values at the same time.

Techniques of Persuasion

Methods or strategies used to convince or influence others to change their attitudes, beliefs, or actions.

Compliance

The act of conforming to or following rules, standards, or laws.