If the Standard Deviation of a Diversified Portfolio Is 20

question 18

Multiple Choice

If the standard deviation of a diversified portfolio is 20% and if the stocks in that portfolio are positively correlated,then what would we expect the average standard deviation of stocks in that portfolio to be?

• A) less than 20%
• B) 20%
• C) greater than 20%
• D) you would need to know the percentage of each stock invested in that portfolio to determine the answer

---

Definitions:

Solution-Focused

An approach that emphasizes finding solutions in the present time and exploring one’s hopes for the future rather than focusing on past issues or problems.

Miracle Question

A therapeutic technique asking clients to imagine how their life would be different if a miracle happened and their problems were solved overnight.

Coping Question

A question posed to an individual that encourages them to think about how they have managed or could manage challenges and stressors in their life.

Trauma-Informed Approach

An approach in various professional settings that involves understanding, recognizing, and responding to the effects of all types of trauma, emphasizing physical, psychological, and emotional safety for both providers and survivors.