A Stock Portfolio Consists of Two Stocks X and Y

question 106

Multiple Choice

A stock portfolio consists of two stocks X and Y. Their daily closing prices are independent random variables with standard deviations σ_X = 2.51 and σ_Y = 5.22. What is the standard deviation of the sum of the closing prices of these two stocks?

• A)33.55
• B)6.48
• C)7.73
• D)5.79

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Definitions:

Quantity Demanded

This is the total amount of a good or service that consumers are willing and able to purchase at a given price over a specified period.

Cross Price Elasticity

A measure of how the demand for one product changes in response to a change in the price of another product, indicating substitutes or complements.

Substitutes

Goods or services that can replace each other in use, affecting demand when their prices or other attributes change.

Demand

The quantity of a product or service consumers are willing and able to purchase at various prices.