The Standard Deviation of a Portfolio

question 98

Multiple Choice

The standard deviation of a portfolio:

• A) is a measure of that portfolio's systematic risk.
• B) is a weighted average of the standard deviations of the individual securities held in that portfolio.
• C) measures the amount of diversifiable risk inherent in the portfolio.
• D) serves as the basis for computing the appropriate risk premium for that portfolio.
• E) can be less than the weighted average of the standard deviations of the individual securities held in that portfolio.

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Definitions:

Epidemiological Studies

Epidemiological studies are research investigations that examine the patterns, causes, and effects of health and disease conditions in defined populations.

Incidence

The occurrence, rate, or frequency of a disease, crime, or something undesirable within a specified population or area.

Prevalence

The proportion of individuals in a population who have a particular disease or condition at a specific time.

Risk Factors

Elements or conditions that increase the likelihood of developing a disease or injury, including genetic, environmental, and lifestyle factors.