A Portfolio Has 35% of Its Funds Invested in Security

question 65

Multiple Choice

A portfolio has 35% of its funds invested in Security One and 65% of its funds invested in Security Two. Security One has a standard deviation of 6. Security Two has a standard deviation of 12. The securities have a coefficient of correlation of.5. Which of the following values is closest to portfolio variance?

• A) 81.
• B) 90.
• C) 27.
• D) 6561.

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Definitions:

Skewed Left

A distribution characterized by a longer tail on the left side, suggesting that the bulk of data is concentrated to the right of the mean.

Relative Frequency Histogram

A type of histogram that displays the relative frequencies of different categories of data, showing the proportion of data that falls into each category rather than the raw count.

Frequency Histogram

A graphical representation showing the frequency of various outcomes in a dataset, usually with bars.

Frequency Distribution

A statistical representation that shows the number of occurrences of each value in a dataset, often displayed in a table or graph.