USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
$\sigma$ I), Covariance (COV_i,j), and Asset Weight (W_i) Are as Shown

question 46

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 6.6. What is the expected return of a portfolio of two risky assets if the expected return E(R_i) , standard deviation ( $\sigma$ i) , covariance (COV_i,j) , and asset weight (W_i) are as shown above?

• A) 10.6%
• B) 10.2%
• C) 13.0%
• D) 11.9%
• E) 14.0%

---

Definitions:

Pooled Standard Deviation

The combined standard deviation of two or more groups of data, used when the groups have a common or similar mean but differ in sample size.

Sample Means

The average value calculated from a sample of a population.

Centerline

In statistics, the centerline often refers to the median value in a dataset or the middle line in a control chart that represents the average level of performance.

Process Capability Index

The process capability index is a statistical measure that quantifies how well a process can produce output within specified limits compared to the allowable spread of specification limits.