The Standard Deviation of the Risk-Free Security Is

question 49

Multiple Choice

The standard deviation of the risk-free security is

• A) less than the standard deviation of the optimal risky domestic portfolio.
• B) less than the standard deviation of the optimal international portfolio.
• C) is equal to zero.
• D) all of the above.

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Definitions:

Multiply

The mathematical operation of scaling one number by another, representing repeated addition.

Simplify

The process of making an algebraic expression or equation easier to understand by reducing it to its most basic form.

Divide

A mathematical operation where the total quantity is divided into equal parts, and the result shows how many of those parts make up the original amount.

Simplify

The process of altering an expression or equation to make it easier to work with, by combining like terms, reducing fractions, or employing identities.