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Stock A: σ_A = 25%, Stock B: σ_B = 15%, correlation 0; weights 50:50. Portfolio standard deviation is closest to:
A17.5%
B20.0%
C12.5%
D14.6%
Answer & Solution
Correct answer: D. 14.6%
1. Identify what the question asks: this concept maps to zerocorrelation (§4.4.3.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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