Which One of the Following Statements Is Correct Concerning the Standard

question 86

Multiple Choice

Which one of the following statements is correct concerning the standard deviation of a portfolio?

• A)The greater the diversification of a portfolio, the greater the standard deviation of that
• Portfolio.
• B)The standard deviation of a portfolio can often be lowered by changing the weights of the
• Securities in the portfolio.
• C)Standard deviation is used to determine the amount of risk premium that should apply to a
• Portfolio.
• D)Standard deviation measures only the systematic risk of a portfolio.
• E)The standard deviation of a portfolio is equal to a weighted average of the standard
• Deviations of the individual securities held within the portfolio.

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Definitions:

Expert Power

Influence wielded by an individual or group due to their recognized knowledge or expertise in a specific area.

Manager's Authority

The rights and powers entrusted to a manager to make decisions and direct resources and personnel towards the accomplishment of organizational objectives.

Manager's Power

The authority and influence held by managers to make decisions and direct the actions of employees.

Conglomerate

A coarse-grained sedimentary rock composed of rounded fragments or clasts of pre-existing rocks.