Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

AAFM GLO_CWM_LVL_1 Exam - Topic 4 Question 95 Discussion

Given the following information:What is the expected return and standard deviation of the portfolio if 50% of funds invested in each stock? What would be the impact if the correlation coefficient were 0.6 instead of 0.2?
C) 16%, 0.314, 0.273
A) 18%, 0.456, 0.312
B) 16%, 0.398, 0.296
D) 19%, 0.429, 0.316

AAFM GLO_CWM_LVL_1 Exam - Topic 4 Question 95 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam
Question #: 95
Topic #: 4
[All GLO_CWM_LVL_1 Questions]

Given the following information:

What is the expected return and standard deviation of the portfolio if 50% of funds invested in each stock? What would be the impact if the correlation coefficient were 0.6 instead of 0.2?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Jodi at Nov 16, 2024, 09:50 AM

Limited Time Offer

25%

Off

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

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Stevie
6 months ago
The expected return seems reasonable, but those deviations are tricky!
upvoted 0 times
...
Melissia
7 months ago
I disagree, I feel like the correlation change would really affect the outcome.
upvoted 0 times
...
Cheryl
7 months ago
Surprised by how low the standard deviation can go!
upvoted 0 times
...
Virgina
7 months ago
I think option D might be too optimistic.
upvoted 0 times
...
Dominga
7 months ago
Looks like option B is the most balanced choice.
upvoted 0 times
...
Alaine
8 months ago
I’m leaning towards option B, but I can't shake the feeling that I might have mixed up the correlation effects.
upvoted 0 times
...
Oliva
8 months ago
I think the expected return should be around 16%, but I’m not confident about the standard deviation. The correlation change might really affect it.
upvoted 0 times
...
Josefa
8 months ago
This question feels familiar; I think we did a similar one where we had to adjust for correlation. I hope I remember the right steps!
upvoted 0 times
...
Valentin
8 months ago
I remember we practiced calculating expected returns, but I'm unsure about the exact formulas for standard deviation in a portfolio.
upvoted 0 times
...
Josue
8 months ago
I'm feeling pretty confident about this one. The key is to apply the right portfolio theory equations and pay attention to the correlation coefficient change.
upvoted 0 times
...
Nu
8 months ago
Okay, I think I've got this. I'll plug the numbers into the portfolio optimization formulas and see which answer choice matches my calculations.
upvoted 0 times
...
Kati
8 months ago
Hmm, I'm a bit confused by the correlation coefficient part. How does that impact the portfolio metrics? I'll need to review that concept.
upvoted 0 times
...
Maryann
8 months ago
This looks like a standard portfolio optimization problem. I'll need to calculate the expected return and standard deviation based on the given information.
upvoted 0 times
...
Sherly
2 years ago
Forget the numbers, I'm just here for the portfolio memes. 'How to turn your investment into a complete nightmare in 3 easy steps.'
upvoted 0 times
Hana
1 year ago
User 3
upvoted 0 times
...
Willodean
1 year ago
User 2
upvoted 0 times
...
Margurite
1 year ago
User 1
upvoted 0 times
...
...
Kayleigh
2 years ago
Wait, did they just ask us to calculate the impact of correlation on a portfolio? Sounds like someone's been watching too many finance documentaries on Netflix.
upvoted 0 times
...
Elenora
2 years ago
But what about the impact of the correlation coefficient? Would it really make a big difference?
upvoted 0 times
...
Annmarie
2 years ago
I agree with Adrianna, option B seems to be the most reasonable choice.
upvoted 0 times
...
Aileen
2 years ago
High risk, high reward! 19% return and 0.429 standard deviation? Sign me up, I'm feeling lucky today!
upvoted 0 times
Gerald
1 year ago
It's all about finding the right balance between risk and reward.
upvoted 0 times
...
Salley
1 year ago
I prefer a more conservative approach, maybe option C would be better for me.
upvoted 0 times
...
Ricarda
1 year ago
I think I'll go with option D, 19% return sounds tempting.
upvoted 0 times
...
Izetta
2 years ago
That's a bold move, high risk indeed!
upvoted 0 times
...
...
Adrianna
2 years ago
I think the expected return would be 16% with option B.
upvoted 0 times
...
Evangelina
2 years ago
Ah, the sweet spot! 16% return and 0.314 standard deviation. Now that's what I call a well-balanced portfolio.
upvoted 0 times
Nadine
2 years ago
Azzie: I wonder how the numbers would change if the correlation coefficient was 0.6 instead of 0.2.
upvoted 0 times
...
Azzie
2 years ago
User 2: Definitely, it's the sweet spot for a well-balanced portfolio.
upvoted 0 times
...
Ressie
2 years ago
User 1: I agree, a 16% return and 0.314 standard deviation is ideal.
upvoted 0 times
...
...
Michael
2 years ago
I'm more of a conservative investor, so I'd go with option B - 16% return and 0.398 standard deviation. Seems like a safer bet.
upvoted 0 times
...
Micheline
2 years ago
Hmm, let's see... 18% return and 0.456 standard deviation? Sounds like a pretty risky investment to me.
upvoted 0 times
Glenn
1 year ago
That would definitely impact the risk and return of the portfolio.
upvoted 0 times
...
Gail
1 year ago
But what if the correlation coefficient was 0.6 instead of 0.2?
upvoted 0 times
...
Skye
1 year ago
I think option D looks more appealing with a 19% return.
upvoted 0 times
...
Latricia
2 years ago
I agree, that does seem like a high standard deviation.
upvoted 0 times
...
...

Save Cancel