Portfolio's Risk Is Measured by the Weighted Average of the Standard

question 63

True/False

portfolio's risk is measured by the weighted average of the standard deviations of the securities in the portfolio It is this aspect of portfolios that allows investors to combine stocks and thus reduce the riskiness of their portfolios.

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Definitions:

Balance Sheet Approach

A method of estimating allowances based on the balances of particular accounts, focusing on the assets and liabilities reported on the balance sheet.

Bad Debts Expense

A provision in accounting for accounts receivable that are not expected to be collected, recognizing them as an expense.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of accounts receivable a company does not expect to collect.

Uncollectible Accounts

Accounts receivable that are deemed to be uncollectible, leading to them being written off as a bad debt expense.