The Expected Return on VZ Next Year Is 12% with a Standard

question 78

Multiple Choice

The expected return on VZ next year is 12% with a standard deviation of 20%.The expected return on ANT next year is 24% with a standard deviation of 30%.The correlation between the two shares is .6.If Arya makes equal investments in VZ and ANT, what is the standard deviation of her portfolio?

• A)22.47%
• B)25.00%
• C)5.05%
• D)15.00%

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Definitions:

Hypothesis Test

A method of statistical inference used to decide whether there is enough evidence to reject a null hypothesis about a population parameter based on sample data.

P-Value

The probability of observing results at least as extreme as those in the data, assuming the null hypothesis is true, used as a method to test hypotheses.

Large-Sample Z

A statistical test used for hypothesis testing or constructing confidence intervals when the sample size is large, typically using the Z-distribution.

Major Defects

Significant imperfections or flaws in a product, system, or process that adversely affect its performance, safety, or intended function.