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Answer the Following Two Questions About Portfolio Risk and Return

question 27

Multiple Choice

Answer the following two questions about portfolio risk and return. Assume all weights are positive.
1) Can the return of a portfolio ever be lower than the lowest return on an individual security in the portfolio?
2) Can the variance of a portfolio ever be lower than the lowest variance of an individual security in the portfolio?

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Definitions:

Unit

In economics, a unit can refer to a single item or product which can be quantified and measured.

Tax Per Unit

A specific charge levied on each unit of a product or service, often used by governments to regulate consumption or raise revenue.

Sellers

Individuals or entities that offer goods or services for sale to consumers or other businesses.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

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