Stocks A, B, and C are similar in some respects: Each has an expected return of 10% and a standard deviation of 25%. Stocks A and B have returns that are independent of one another; i. e., their correlation coefficient, r, equals zero. Stocks A and C have returns that are negatively correlated with one another; i. e., r is less than 0. Portfolio AB is a portfolio with half of its money invested in Stock A and half in Stock B. Portfolio AC is a portfolio with half of its money invested in Stock A and half invested in Stock C. Which of the following statements is CORRECT?

a. Portfolio AB has a standard deviation that is greater than 25%.
b. Portfolio AC has an expected return that is less than 10%.
c. Portfolio AC has a standard deviation that is less than 25%.
d. Portfolio AB has a standard deviation that is equal to 25%.
e. Portfolio AC has an expected return that is greater than 25%.

The correct situation from the given statements is:

C.  Portfolio AC has a standard deviation that is less than 25%.

Explanation:

Given details of the question are:

There are three stocks A,B,C,

All of the three are similar in some or the other respects.

Expected return of each of them is 10% and standard deviation of each of them is calculated to be 25%.

The stocks which are independent of one another of having returns is Stock A and B

  i.e. their correlation coefficient, r, has a value equalling to zero.

Now, stocks A and C are negatively correlated to one another in terms of returns,

i.e.  the value of correlation coefficient r is less than zero.

Therefore, A portfolio which is having half of its money invested in stock A and the other half in stock B is portfolio AB.

On the other hand portfolio of which half of its money in stock A and other half in stock C is portfolio AC.

So, The correct situation from the given statements is:

C. A standard deviation that is less than 25% is of portfolio AC.

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

answerthe above statement is false;