Question 1 The standard deviation of retums equais 15.0% for stock X and 20.0% for atock Z. The correlation between the two stocks equals 0.50. You make a portfolio that ellocates 55% of tunds to stock X. The remainder is put in stock Z. Which statement correctly describes the riek of the resultant portfol O a Th portiulio slandard deviation is 7.0% and represents diversification benefits 238 basis points relative to average compunent risk O b The portfolio standard deviation is 9.5% and represents diversification benefits of 238 basis points relative to average component risk c The partir standard deviatian is 9.5% and ropresents diversification benefits of 274 hasi poimts lative to avarage companent risk Tha porti dard atInn is 148% rapras Ants diversificatlan henA fits mf 274 Lativa to O e. Tha porttolo standard deviation is 0% and represents dversMication benefits ot274 basis points relative to avarage component risk