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A portfolio holds 50% in market index (β=1, σ=15%) and 50% in T-bills (σ=0). Portfolio standard deviation equals:
A10.0%
B7.5%
C15.0%
D0.0%
Answer & Solution
Correct answer: B. 7.5%
1. Identify what the question asks: this concept maps to riskfreemixing (§7).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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