The Variance of a Portfolio of Risky Securities

question 44

Multiple Choice

The variance of a portfolio of risky securities

• A) is a weighted sum of the securities' variances.
• B) is the sum of the securities' variances.
• C) is the weighted sum of the securities' variances and covariances.
• D) is the sum of the securities' covariances.
• E) none of these.

---

Definitions:

Cumulative Probability

The probability of an event occurring up to a certain point in time or over a range of values, often visualized through a cumulative distribution function.

Monthly Sales

The total volume or dollar value of all sales transactions made by a business within a month, used as an indicator of business performance and market demand.

Probability

The likelihood or chance of a specific outcome occurring, usually expressed as a ratio or percentage.

One-carat Diamond

A measurement unit for diamond weight, equivalent to 200 milligrams.