When Assessing the Risk Impact of Adding a New Security

question 1

Multiple Choice

When assessing the risk impact of adding a new security to a portfolio, it is necessary to consider the

• A) new security's variance
• B) variance of every security in the portfolio
• C) weight of every security in the portfolio
• D) average covariance of the new security with every security in the portfolio
• E) all of the above

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Definitions:

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to taxation.

Vertical Equity

A principle of fairness in taxation that dictates taxpayers with a greater ability to pay should contribute more in taxes.

Cardio-Vascular Diseases

A class of diseases that involve the heart or blood vessels, including coronary artery disease, hypertension, and stroke.

Fried Foods Tax

A hypothetical or proposed tax imposed on products with high levels of fried content to discourage consumption and address health concerns.