Half of a portfolio consists of stock A, which has an expected return of 24.10% and a standard deviation of returns of 37.11%, and half of the portfolio consists of stock B, which also has an expected return of 24.10% and a standard deviation of returns of 37.11%. If the returns of stock A and stock B do not move perfectly together in the same direction by the same relative amount, then which one of the following assertions is true? The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is 37.11% The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is not 37.11% The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is not 37.11% The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is 37.11%
Half of a portfolio consists of stock A, which has an expected return of 24.10% and a standard deviation of returns of 37.11%, and half of the portfolio consists of stock B, which also has an expected return of 24.10% and a standard deviation of returns of 37.11%. If the returns of stock A and stock B do not move perfectly together in the same direction by the same relative amount, then which one of the following assertions is true? The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is 37.11% The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is not 37.11% The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is not 37.11% The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is 37.11%
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 6P
Question
![Half of a portfolio consists of stock A, which has an expected return of 24.10% and a standard deviation of returns of 37.11%, and half of the portfolio consists
of stock B, which also has an expected return of 24.10% and a standard deviation of returns of 37.11%. If the returns of stock A and stock B do not move
perfectly together in the same direction by the same relative amount, then which one of the following assertions is true?
The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is 37.11%
The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is not 37.11%
The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is not 37.11%
The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is 37.11%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19d0c0ee-b2f7-4400-bddc-d84e0eebb818%2Ff9eca2b6-1d21-44aa-afe5-2d808069a85b%2F6zmy5vj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Half of a portfolio consists of stock A, which has an expected return of 24.10% and a standard deviation of returns of 37.11%, and half of the portfolio consists
of stock B, which also has an expected return of 24.10% and a standard deviation of returns of 37.11%. If the returns of stock A and stock B do not move
perfectly together in the same direction by the same relative amount, then which one of the following assertions is true?
The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is 37.11%
The expected return of the portfolio is 24.10% and the standard deviation of the portfolio is not 37.11%
The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is not 37.11%
The expected return of the portfolio is not 24.10% and the standard deviation of the portfolio is 37.11%
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