DROP DOWN 1 OPTIONS: 16.05%, 14.445%, 8.025%, 10.70%

DROP DOWN 2 OPTIONS: LESS THAN, EQUAL TO, MORE THAN

A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of finance. Just like standalone assets and securities, portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the expected rate of return. Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio. Consider the following case: Kenji is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: Stock Standard Deviation Percentage of Portfolio Expected Return Artemis Inc. 20% 6.00% 23.00% Babish & Co. 30% 14.00% 27.00% Cornell Industries 35% 13.00% 30.00% Danforth Motors 15% 5.00% 32.00% The expected return on Kenji's stock portfolio is Suppose each stock in the preceding portfolio has a correlation coefficient of 0.4 (p = 0.4) with each of the other stocks. If the weighted average of the risk (standard deviation) of the individual securities in the partially diversified portfolio of four stocks is 28%, the portfolio's standard deviation (op) most likely is 28%