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Question
You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55. The standard deviation of the resulting portfolio will be ________________.A. more than 18% but less than 24%
B. equal to 18%
C. more than 12% but less than 18%
D. equal to 12%
Answer
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Related questions
Q:
Passive investors with well-diversified international portfolios _________.
A. can safely ignore all political risk in emerging markets
B. can expect very large diversification gains from their international investing
C. do not need to be concerned with hedging exposure to foreign currencies
D. can expect returns to be better than the EAFE on a consistent basis
Q:
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D. passive management
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C. market risk
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Q:
EAFE stands for _______.
A. Equity and Foreign Exchange
B. Europe, Australasia, Far East
C. Europe, Asian, Foreign Exchange
D. Europe, American, Far East
Q:
What is the proper strategy to capture alpha given the following data? A portfolio generates an annual return of 14%, a beta of 1.5, and the market index returns 12%. The risk free rate is 3%.
A. long the index
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Q:
Consider a hedge fund with $200 million at the start of the year. The benchmark S&P 500 Index was up 16.5% during the same period. The gross return on assets is 21%, and the expense ratio is 2%. For each 1% above the benchmark return, the fund managers receive a .1% incentive bonus.
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Q:
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Q:
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Q:
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Q:
Which of the following typically employ(s) significant amounts of leverage?
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IV. Income mutual funds
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Q:
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Q:
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I. WEBS can be shorted.
II. WEBS trade continuously on the AMEX.
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Q:
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Q:
In the PRS financial risk ratings, the United States rates poorly because of the U.S. ________.
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II. Large trade deficit
III. Large amount of total debt
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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B. sell T-bond futures
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Q:
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Q:
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Q:
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Q:
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B. sell all the stocks in the S&P 500 and buy call options on S&P 500 Index
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D. sell short all the stocks in the S&P 500 and buy S&P 500 Index futures
Q:
An investor would want to __________ to exploit an expected fall in interest rates.
A. sell S&P 500 Index futures
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Q:
You are currently long in a futures contract. You instruct a broker to enter the short side of a futures contract to close your position. This is called __________.
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Q:
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Q:
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Q:
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B. stock prices may fall by a larger amount than the model assumes
C. stock prices evolve continuously in today's actively traded markets
D. stocks with lower exercise prices are more likely to pay dividends