Exhibit 20-3
Cameron Corporation Would Like to Simultaneously Borrow Japanese

question 51

Multiple Choice

Exhibit 20-3
Cameron Corporation would like to simultaneously borrow Japanese yen (¥) and Sudanese dinar (SDD) for a six-month period. Cameron would like to determine the expected financing rate and the variance of a portfolio consisting of 30% yen and 70% dinar. Cameron has gathered the following information:
$\begin{array}{c}\begin{array}{lll}\text {Mean effective financing rate of Japanese yen for six months}\\\text { Mean effective financing rate of Sudanese dinar for six months }\\\text {Standard deviation of Japanese yen's effective financing rate }\\\text {Standard deviation of Sudanese dinar's effective financing rat}\\\text { Correlation coefficient of effective financing rates of these two currencies} \end{array}\begin{array}{c}4 \% \\1 \% \\.10 \\.20 \\.23 \end{array}\end{array}$

-Refer to Exhibit 20-3. What is the expected standard deviation of the portfolio contemplated by Cameron?

• A)2.24%.
• B)14.98%.
• C)2.89%.
• D)17.00%.
• E)none of the above

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Definitions:

Sample Size

The number of individual observations or data points collected and included in a sample from a larger population.

Biased

Showing preference or prejudice for or against something or someone, often in a way considered to be unfair.

Simple Random Samples

A subset of individuals chosen from a larger set, where each individual has an equal chance of being selected.

Selection Bias

A type of bias caused by selecting non-random data for statistical analysis, which can affect the validity of conclusions.