In a Portfolio, Risk Is Evaluated in a Different Way

question 36

Multiple Choice

In a portfolio, risk is evaluated in a different way than with an individual project. In evaluating portfolio risk we

• A) need to consider the impact of a given project on the overall risk of the firm.
• B) recognize that a risky investment always creates a portfolio with less risk.
• C) need to ensure all the projects in the portfolio are positively correlated.
• D) all of the other answers are correct.

---

Definitions:

Fifth Amendment

A provision of the U.S. Constitution that provides several protections for individuals, including the right against self-incrimination and the right to due process.

Tenth Amendment

Part of the U.S. Constitution that reserves all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, to the States respectively, or to the people.

Delegated

The act of entrusting another person or entity with specific powers or authority to act on one's behalf.

Constitution

is the fundamental and supreme law of a nation, setting forth the framework for the government's powers and the rights of the citizens.