The Standard Deviation of a Portfolio

question 48

Multiple Choice

The standard deviation of a portfolio:

• A)is a measure of that portfolio's systematic risk.
• B)is a weighed average of the standard deviations of the individual securities held in that portfolio.
• C)measures the amount of diversifiable risk inherent in the portfolio.
• D)serves as the basis for computing the appropriate risk premium for that portfolio.
• E)can be less than the weighted average of the standard deviations of the individual securities held in that portfolio.

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Definitions:

Debt

An amount of money borrowed by one party from another, often used to make large purchases that are not affordable with available cash.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, without relying on inventory.

Current Liabilities

Obligations or debts that a company is expected to pay within a year.