Which One of the Following Statements Is Correct Concerning the Standard

question 28

Multiple Choice

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

• A)The standard deviation of a portfolio can often be lowered by changing the weights of the securities in the 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)Standard deviation is used to determine the amount of risk premium that should apply to a portfolio.
• E)The standard deviation of a portfolio is equal to a weighted average of the standard deviations of the individual securities held within the portfolio.

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Definitions:

Temper Tantrums

Emotional outbursts, often observed in children, that are characterized by yelling, crying, and aggressive or defiant behavior.

Anal Stage

A phase in Freudian psychosexual development centered around the child's control over bowel movements, typically occurring from age 18 months to three years.

Defense Mechanism

Psychological strategies used by individuals to cope with reality and maintain a self-image.

Repression

A defense mechanism that involves unconscious denial of the existence of something that causes anxiety.