What Is the Typical Relationship Between the Standard Deviation of an Individual

question 3

Multiple Choice

What is the typical relationship between the standard deviation of an individual common stock and the standard deviation of a diversified portfolio of common stocks?

• A)individual stock's standard deviation will be lower
• B)individual stock's standard deviation will be higher
• C)the standard deviations should be equal
• D)there is no way to predict this relationship

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