When a Security Is Added to a Portfolio the Appropriate

question 74

Multiple Choice

When a security is added to a portfolio the appropriate return and risk contributions are:

• A) the expected return of the asset and its standard deviation.
• B) the expected return and the variance.
• C) the expected return and the beta.
• D) the historical return and the beta.
• E) these both cannot be measured.

---

Definitions:

Computing Mean

The process of calculating the average value of a set of numbers by adding them together and dividing by the quantity of numbers.

ΣX / N

The formula for calculating the mean of a set of data, where ΣX is the sum of all data points and N is the number of data points.

Arithmetic Average

Another term for the mean, calculated as the sum of all values divided by the number of values.

Frequency Value

The count of how many times a specific data point or value appears within a dataset.