AAFM GLO_CWM_LVL_1 Exam - Topic 2 Question 48 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 48
Topic #: 2

Mr. Shyam has a portfolio consisting of two stocks A & B. Stock A has a standard deviation of 5 % while stock B has a standard deviation of 15%. Stock A comprises 40% of the portfolio and Stock B consists of 60%. If the correlation of returns of A& B is .5, the variance of return on the portfolio is _________.

A--0.0035

B--0.0085

C0.0094

D0.0103

Show Suggested Answer

Suggested Answer: D

by Donte at Aug 03, 2022, 04:11 PM

Limited Time Offer

25%

Off

Get Premium GLO_CWM_LVL_1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

My

4 months ago

Surprised the variance is that high with a 40/60 split!

upvoted 0 times

...

Joana

4 months ago

Wait, how does correlation even affect this?

upvoted 0 times

...

Quentin

5 months ago

Definitely leaning towards option B for the variance.

upvoted 0 times

...

Isidra

5 months ago

I think the variance calculation is tricky here.

upvoted 0 times

...

Jacquelyne

5 months ago

Stock A is way less volatile than Stock B!

upvoted 0 times

...

Cordell

5 months ago

I believe the formula involves squaring the weights and adding the covariance term, but I might be mixing it up with another topic.

upvoted 0 times

...

Xochitl

5 months ago

I think the variance should be lower than the highest individual variance, but I can't recall the exact calculation steps.

upvoted 0 times

...

Frederic

5 months ago

This question feels familiar; I think we did a similar one where we had to find the variance using weights and standard deviations.

upvoted 0 times

...

Delisa

5 months ago

I remember we calculated portfolio variance in class, but I'm not entirely sure about the formula when correlation is involved.

upvoted 0 times

...

Willodean

5 months ago

Okay, I've got a strategy for this. I'll visualize the utility interface and mentally go through the list of applications, remembering which one is not selected by default. I think I can figure this out.

upvoted 0 times

...

Barrett

5 months ago

Okay, let's see. Sulfidation is related to the formation of sulfide compounds, so I'm guessing it's going to create some kind of localized attack rather than uniform corrosion.

upvoted 0 times

...

Dwight

5 months ago

Based on my understanding, the TOGAF Architecture Governance Framework is all about establishing processes and procedures to manage and maintain an organization's architecture. I think option A is the best description of that.

upvoted 0 times

...

Huey

5 months ago

I think the key here is understanding the relationship between Teams and OneDrive for Business. Since Teams uses OneDrive for file storage, an In-Place Hold on the user's OneDrive might prevent them from permanently deleting those private chat files. But I'm not 100% sure if that's the correct approach.

upvoted 0 times

...