The Volatility of Home Depot Share Prices Is 30% and That

question 98

Multiple Choice

The volatility of Home Depot share prices is 30% and that of General Motors shares is 30%. When I hold both stocks in my portfolio with an equal amount in each, and the stocks returns have a correlation of minus 1, the overall volatility of returns of the portfolio is ________.

• A) more than 30%
• B) unchanged at 30%
• C) zero
• D) equal to 60%

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Definitions:

Inflatable Cuff

A device, often part of a blood pressure monitor, that is wrapped around a limb and inflated to restrict blood flow for measurement purposes.

Orthostatic Hypotension

A situation in which blood pressure becomes low and the pulse increases when a patient is moved from a lying to standing position; also known as postural hypotension.

Vital Signs

Basic physiological measurements of the body's main functions which include temperature, pulse, respiration rate, and blood pressure.

Orthostatic Hypotension

A form of low blood pressure that happens when standing up from sitting or lying down, causing dizziness or lightheadedness.