Which Two of the Following Options Correctly Give Rules for Portfolio

question 27

Multiple Choice

Which two of the following options correctly give rules for portfolio management according to mean- variance portfolio theory?

• A) Portfolio standard deviation is less than the weighted average risk of the individual investments, except for perfectly positively correlated investments.
• B) Portfolio returns are a weighted average of the expected returns on the individual investments.
• C) Portfolio standard deviation is greater than the weighted average risk of the individual investments, except for perfectly negatively correlated investments.
• D) Expected returns are a weighted average of the portfolio return on the group of investments.

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Definitions:

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Public Law 94-142

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