Question 1
1.
If a stock portfolio is well diversified, then the portfolio variance:
Answer
will equal the variance of the most volatile stock in the portfolio.
may be less than the variance of the least risky stock in the portfolio.
must be equal to or greater than the variance of the least risky stock in the portfolio.
will be a weighted average of the variances of the individual securities in the
portfolio.
will be an arithmetic average of the variances of the individual securities in the
portfolio.
0.1 points
Question 2
1.
The standard deviation of a portfolio:
Answer
is a weighted average of the standard deviations of the individual securities held in
the portfolio.
can never be less than the standard deviation of the most risky security in the
portfolio.
must be equal to or greater than the lowest standard deviation of any single security
held in the portfolio.
is an arithmetic average of the standard deviations of the individual securities which
comprise the portfolio.
can be less than the standard deviation of the least risky security in the portfolio.
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 Summer '11
 RajneeshSharma
 Finance, Standard Deviation, Variance, Stock A

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