How Would You Assess the Risks Associated with a Portfolio

question 16

Multiple Choice

How would you assess the risks associated with a portfolio of two companies that show perfect positive correlation?

• A) Assume that they were zero
• B) Calculate the difference between the two risks
• C) Calculate the sum of the two risks
• D) Calculate the average of the two risks

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Definitions:

Statement of Income

A financial report that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Non-Operating Activities

Transactions and events that are not related to the primary activities of the business.

Main Operations

The core activities or tasks through which a company generates its revenue and income, focusing on its primary business objectives.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB).