Which One of the Following Statements Is Correct Concerning the Standard

question 70

Multiple Choice

Which one of the following statements is correct concerning the standard deviation of a portfolio?

• A)Standard deviation is used to determine the amount of risk premium that should apply to a portfolio.
• B)The greater the diversification of a portfolio,the greater the standard deviation of that portfolio.
• C)Standard deviation measures only the systematic risk of a portfolio.
• D)The standard deviation of a portfolio can often be lowered by changing the weights of the securities in the portfolio.
• E)The standard deviation of a portfolio must equal the weighted average of the standard deviations of the individual securities held within the portfolio.

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Definitions:

Grossly Negligent

Refers to a severe lack of care or action that significantly breaches the duty of care owed to another, resulting in substantial harm or risk.

Financial Irregularities

Unusual or improper financial transactions that may indicate mismanagement, fraud, or violations of regulations.

Contradictory Evidence

Information or data that directly opposes or disputes the claims or findings presented in a specific context.

Reliance

The act of depending on or trusting in something or someone for support or maintenance.