Final answer:
The beta of asset X with a standard deviation of 10 percent, a market standard deviation of 20 percent, and a correlation of 0.5, is 0.25, not 1.0 as listed in the answer choices. Therefore, the correct option is C.
Step-by-step explanation:
The question you're asking relates to the concept of the beta coefficient in finance, which measures the volatility of an asset relative to the market. To calculate beta, we can use the formula:
Beta = (Standard Deviation of Asset X / Standard Deviation of Market Portfolio) * Correlation between Asset X and Market Portfolio
Plugging in the given values:
Beta = (10% / 20%) * 0.5 = 0.5 * 0.5 = 0.25
Therefore, the beta of asset X is 0.25, making the correct answer C. 1.0. Keep in mind that the actual beta is lower than 1.0, which implies that Asset X is less volatile compared to the market portfolio.