5.a

5.b

5.c

5.d

Suppose that your friend has decided to construct a portfolio that will contain stocks X and Y. The standard deviations of stock X and stock Y are 12% and 16% respectively, and the correlation between stock X and stock Y is 0.6. Your friend has decided to put 40% of his money on stock X and the rest on stock Y. What is the standard deviation of his portfolio? 8.59% 9.03% 10.88% 13.06% You have invested 30% of your wealth in asset A and the rest in risk-free assets. The variance of asset A is 0.2. What is the standard deviation of your portfolio? 0.0604 0.1011 0.1342 0.1849 The slope of the Security Market Line (SML) is The market risk premium The risk-free rate The beta The expected return of the market You have collected the following returns data: year 2018 return=5%; year 2019 return=-3%; year 2020 return=10%. What is the average return for this security? 3.00% 3.20% 4.00% 5.00%