A Portfolio Has 40% of Its Value in IBM Shares

question 57

Multiple Choice

A portfolio has 40% of its value in IBM shares and the rest in Microsoft (MSFT) . The volatility of IBM and MSFT are 40% and 30%, respectively, and the correlation between IBM and MSFT is -0.3. What is the standard deviation of the portfolio?

• A) 19.17%
• B) 18.16%
• C) 22.20%
• D) 20.18%

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Definitions:

Grand Theories

Grand theories are broad and comprehensive frameworks in psychology that offer insights into human behavior, cognition, and emotions, explaining various psychological phenomena.

Mini-theories

Mini-theories refer to smaller, specific theories that explain limited aspects of phenomena or behavior, contrasting with comprehensive theories that aim to explain broader aspects.

Empirical Evidence

Information acquired by observation or experimentation that is used as a basis for knowledge or as validation for scientific theories.

Psychodynamic Theories

A group of theories that view human behavior as a dynamic interaction between the conscious and unconscious mind, including associated motives, conflicts, and past experiences.