The Variance of a Portfolio Does Not Depend On

question 2

Multiple Choice

The variance of a portfolio does not depend on:

• A)the proportion of the current market value of the portfolio constituted by each security.
• B)the variance of the possible returns of each security.
• C)the total market value of the portfolio.
• D)the correlation between possible returns on the securities held in the portfolio.

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Definitions:

Cognitive Dissonance

The mental discomfort or psychological stress experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Balance Theory

A psychological theory suggesting that individuals strive for mental consistency among their beliefs, attitudes, and sentiments, and will change or eliminate beliefs to achieve balance.

Environmental Activist

An individual who actively promotes the protection and preservation of the environment through various actions and campaigns.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time, often leading to an alteration in one's beliefs to reduce the discomfort.