The Expected Return on a Portfolio

question 34

Multiple Choice

The expected return on a portfolio:
I. can never exceed the expected return of the best performing security in the portfolio.
II. must be equal to or greater than the expected return of the worst performing security in the portfolio.
III. is independent of the unsystematic risks of the individual securities held in the portfolio.
IV. is independent of the allocation of the portfolio amongst individual securities.

• A) I and III only
• B) II and IV only
• C) I and II only
• D) I, II, and III only
• E) I, II, III, and IV

---

Definitions:

Explained Variance

The portion of the total variance in a dataset that is attributable to the model's inputs.

Criterion

A standard or principle by which something is judged or decisions are made.

Correlation

A numerical indicator showing how much two or more factors vary in unison.

Variables

In research, these are elements or factors that can change and affect the outcome of a study, and they can be manipulated or measured.