A Portfolio Has 25% of Its Funds Invested in Security

question 47

Multiple Choice

A portfolio has 25% of its funds invested in Security C and 75% of its funds invested in Security C has an expected return of 8% and a standard deviation of 6%. Security B has an expected return of 10% and a standard deviation of 10%. The securities have a coefficient of correlation of .6. Which of the following values is closest to portfolio return and variance?

• A) .095; .001675.
• B) .095; .0072.
• C) .100; .00849.
• D) .090; .0081.

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Definitions:

Enlightenment

A cultural and intellectual movement in Europe during the 17th and 18th centuries that emphasized reason, individualism, and skepticism of traditional doctrines.

Colonial America

Refers to the period in North American history from the 17th to the 18th century when European countries established colonies on the continent, leading to diverse cultural exchanges and conflicts.

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