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FNCE 3030 1. Each individual asset's weight in the portfolio is found by: a. dividing the asset's standard deviation by its expected value. b. calculating

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FNCE 3030 1. Each individual asset's weight in the portfolio is found by: a. dividing the asset's standard deviation by its expected value. b. calculating the percentage of the asset's value to the total portfolio value. c. calculating the return of the asset as a percent of total portfolio return. d. dividing the asset's expected value by its standard deviation. 2. Two stocks with perfect negative correlation will have a correlation coefficient of c. 0.0 3. Security A and Security B have a correlation coefficient of o. If Security A's return is expected to increase by 10 percent, Security B's: a. return should also increase by 10 percent. b. return should decrease by 10 percent. c. return should be zero. d. expected return is impossible to determine from the above information. 4. Owning two securities instead of one will not improve a portfolio's risk-returrn tradeoff if the two securities are: a. perfectly positively correlated with each other. b. perfectly independent of each other. c. perfectly negatively correlated with each other. d. of the same category, e.g. blue chips. 5. Calculate the risk (standard deviation) of the following two-security portfolio if the orrelation coefficient between the two securities is equal to 0.5

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