$\begin{array}{c}
\begin{array}{c}
\underline{\text {State of the economy}}\
\text {Boom}\
\text {Recession}
\end{array}
\begin{array}{c}
\underline{\text {Probability}}\
.3\
.7\

\end{array}
\begin{array}{c}
\underline{\text {Stock Q}}\
14 \% \
8\% \

\end{array}
\end{array}$

-What is the standard deviation of a portfolio 60 percent invested in Stock P and the remainder in Stock Q?
A) 5.88%
B) 1.46%
C) 4.27%
D) 2.63%
E) 3.30%

Question

$\begin{array}{c}
\begin{array}{c}
\underline{\text {State of the economy}}\
\text {Boom}\
\text {Recession}
\end{array}
\begin{array}{c}
\underline{\text {Probability}}\
.3\
.7\

\end{array}
\begin{array}{c}
\underline{\text {Stock Q}}\
14 \% \
8\% \

\end{array}
\end{array}$
  
-What is the standard deviation of a portfolio 60 percent invested in Stock P and the remainder in Stock Q?
A) 5.88%
B) 1.46%
C) 4.27%
D) 2.63%
E) 3.30%

Quizplus · Accepted Answer

To calculate the standard deviation of the portfolio, we first need to find the expected return of Stock Q and then calculate the portfolio's expected return and standard deviation. However, the information provided does not include details about Stock P, such as its expected returns in boom and recession scenarios, making it impossible to directly calculate the portfolio's standard deviation. The correct answer choice is based on the assumption that the question intends to test understanding of portfolio standard deviation calculation with given probabilities and returns for Stock Q, but without complete information, a precise calculation cannot be performed. Therefore, the choice is based on the information available and the typical approach to such questions, acknowledging the gap in the provided data.

-What Is the Standard Deviation of a Portfolio 60 Percent