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Sumitomo Bank's risk manager has estimated that the DEARs of two of its major assets in its trading portfolio, foreign exchange and bonds, are -

Sumitomo Bank's risk manager has estimated that the DEARs of two of its major assets in its trading portfolio, foreign exchange and bonds, are -$150,000 and -$250,000, respectively.
What is the total DEAR of Sumitomo's trading portfolio if the correlation among assets is assumed to be -1.0?
(Hint: Please review the formula in Example 15-4. For a two-security porfolio, the formula contains two squared terms and one interaction term only. Don't forget to take the square root to arrive a correct value.)
A. $380,789.
B. $100,000.
C. $291,548.
D. $350,000.
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