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:

Equivalent Units

A measure used in cost accounting to express the amount of work done on partially finished goods as a proportion of finished goods.

Conversion Cost

The direct costs of converting raw materials into finished products, including labor and manufacturing overhead.

Total Materials Costs

The combined cost of direct materials and any indirect materials used in the manufacturing process.

Equivalent Units

A term used in cost accounting to express the amount of work completed in terms of fully finished units.