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Aquaman's Stock Returns Have a Standard Deviation of 0

question 25

Multiple Choice

Aquaman's stock returns have a standard deviation of 0.7, and Green Lantern's stock returns have standard deviation of 0.8 The correlation coefficient is 0.1. What is the standard deviation of a portfolio composed of 70 percent Aquaman and 30 percent Green Lantern? Round the answer to five decimal points.


Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the maximum possible profit, where marginal cost equals marginal revenue.

Marginal Revenue

The additional revenue generated from selling one more unit of a good or service.

Marginal Costs

The rise in overall expenses resulting from the production of an additional unit.

Total Variable Cost

The sum of expenses that vary directly with the level of output, rephrasing it as the aggregate of costs that fluctuates in tandem with production volume.

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