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Two assets have σ of 20% and 30% with correlation 0.5; portfolio weights 0.5 each. Portfolio variance is closest to:
A0.0500
B0.0625
C0.0475
D0.0400
Answer & Solution
Correct answer: C. 0.0475
1. Identify what the question asks: this concept maps to portfoliovariance (§4.4.2).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (C).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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