We Can Reduce Volatility by Investing in Less Than Perfectly

question 86

Multiple Choice

We can reduce volatility by investing in less than perfectly correlated assets through diversification because the expected return of a portfolio is the weighted average of the expected returns of its stocks,but the volatility of a portfolio:

• A)is higher than the weighted average volatility.
• B)is independent of weights in the stocks.
• C)is less than the weighted average volatility.
• D)depends on the expected return.
• E)is the same as the weighted average volatility.

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Definitions:

Reference Variables

Variables in Java that hold the memory address of objects rather than the actual object values themselves.

Integer Type

A data type in programming that represents integer numbers, without fractions, in various bits length based on the programming language.

Equals

A method that determines if two objects are equivalent in value or state, commonly found in various programming languages.

Class JFrame

A class in the Java Swing library used to create a window with a title bar, borders, and other controls.