The Standard Deviation of a Portfolio Will Tend to Increase

question 15

Multiple Choice

The standard deviation of a portfolio will tend to increase when:

• A)a risky asset in the portfolio is replaced with U.S.Treasury bills.
• B)one of two stocks related to the airline industry is replaced with a third stock that is unrelated to the airline industry.
• C)the portfolio concentration in a single cyclical industry increases.
• D)the weights of the various diverse securities become more evenly distributed.
• E)short-term bonds are replaced with Treasury Bills.

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Definitions:

Enthusiasm

Intense and eager enjoyment, interest, or approval.

English Exam

A test or assessment designed to evaluate knowledge, understanding, and competency in the English language.

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The ability to learn, understand, and apply knowledge, solve problems, and adapt to new situations.

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The phenomenon where decision-making is disproportionately influenced by outcomes that are certain, compared to those that are probable.