5. An equity investment manager is given the task of beating the S&P 500 index. Hence the risk should be measured in terms of

   (a) Loss relative to the bond benchmark (b) Loss relative to the initial investment

   (c) Loss relative to the S&P 500 index (d) Loss relative to the expected portfolio value

--------------------------------------------------------------------------------------------

5. Consider a portfolio with 80% invested in asset X and 20% invested in asset Y . The volatilities of asset X and Y are 0.2 and 0.3, respectively. The correlation coefficient between the two assets is 50%. What is the portfolio volatility?

   (a) 19.70% (b) 43.51% (c) 12.99% (d) 18.33%