The standard deviation of the return on portfolio

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Reference no: EM131912598

1. Investors require a risk premium as compensation for bearing ______________.

A. unsystematic risk

B. residual risk

C. alpha risk

D. systematic risk

2. You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below ________. (Assume the stock pays no dividends, and ignore interest on the margin loan.)

A. $35.71

B. $26.55

C. $30.77

D. $28.95

3. A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 35%, while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .45. Stock A comprises 40% of the portfolio, while stock B comprises 60% of the portfolio. The standard deviation of the return on this portfolio is _________.

A. 23%

B. 19.76%

C. 18.45%

D. 17.67%

Reference no: EM131912598

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