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

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My

6 months ago

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

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Joana

6 months ago

Wait, how does correlation even affect this?

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Quentin

6 months ago

Definitely leaning towards option B for the variance.

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Isidra

6 months ago

I think the variance calculation is tricky here.

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Jacquelyne

6 months ago

Stock A is way less volatile than Stock B!

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Cordell

7 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.

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Xochitl

7 months ago

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

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Frederic

7 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.

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Delisa

7 months ago

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

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Willodean

7 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.

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Barrett

7 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.

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Dwight

7 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.

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Huey

7 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.

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