When Assessing the Risk Impact of Adding a New Security

question 70

Multiple Choice

When assessing the risk impact of adding a new security to a portfolio,it is necessary to consider the

• A) New securities variance
• B) Variance of every security in the portfolio
• C) Weight of every security in the portfolio
• D) Average covariance of the new security with every security in the portfolio
• E) All of the above

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Definitions:

Bureaucratic Organisation

A structured, formal organization characterized by fixed rules, a clear hierarchy, and detailed procedures and protocols to manage activities.

Mature Organisation

An organization that has developed over time to a stage where it enjoys stable growth, well-established systems, and processes, and a clear sense of identity.

Systems Thinking

An analytical approach that focuses on understanding how components of a system interact with each other within a complete entity or larger system.

Contingency Thinking

The mindset of preparing for and adapting to unforeseen or variable circumstances in decision-making.